EU TRANSPORTATION: Mobico | Event of Default
(MCGLN; Ba2/NR/BBB-; Stable)
Hearing speculation around a potential Event of Default (EoD) following the asset sale.
Based on docs, we do see EoD being met (not legal advice).
If triggered, this could force early redemption at par on:
• £250m 3.625% due 2028
• €500m (£425m) 4.875% due 2031
→ Total: £675m repayment vs. ~£1085m liquidity (£200m cash + £275–290m expected proceeds + £600m undrawn RCF)
→ Co was barely FCF positive this year (+£31m)
The sale is expected to complete in early 3Q (July-Aug)
Doc Analysis
The cessation of business clause appears in both the £28s and €31s base prospectus (standard subclause (h)). It is triggered if the Issuer, Guarantor, or any Material Subsidiary ceases (or threatens to cease) substantially all business unless:
- It is part of a reorganisation or restructuring, not involving insolvency, with prior Trustee or bondholder approval; or
- For a Material Subsidiary, the assets are distributed internally to an entity that becomes Material as a result.
Why we think the carve-outs do not apply:
• The disposal is part of a solvent restructuring, but there is no evidence of Trustee or bondholder approval;
• Proceeds are cash, not a transfer of assets to another group entity;
• The clause ends with: “which as a result of the distribution of such assets becomes a Material Subsidiary” — strongly suggesting that actual assets, not sale proceeds, must be transferred internally.
Material Subsidiary Test
• Defined as ≥10% of gross assets or pre-tax profit
• On FY figures:
• NASB gross assets = £745.8m (including the £550m impairment recorded in 4Q)
• Group total assets = £3,238.5m
→ 23% → comfortably clears threshold
Unless a waiver or approval is granted retroactively, EoD could be triggered if 25% of holders act.
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Historical bullets
GILTS: Looking To Tsys For Cues
Gilts look to Tsys for cues early today, moving away from lows as the overnight weakness in U.S. paper is unwound.
- Futures back to little changed at 92.10.
- The short-term trend in the contract remains bearish, despite the recent correction.
- Initial support and resistance of note located at 91.59 and 92.42.
- Yields essentially flat across the curve.
- 2-Year yields are ~5bp off March lows, with gilt bulls failing to challenge that key short-term level (4.127%) yesterday.
- GBP STIRs now a little more dovish on the day, reversing modest early hawkish adjustments.
- BoE-dated OIS showing 53bp cuts through year-end vs. 52bp ahead of the gilt open.
- SONIA futures flat to +2.0.
- Little of note when it comes to local news.
- Wednesday’s UK speaker and data schedule is empty.
- The only real point of scheduled domestic interest comes via the GBP1.6bln auction of the 1.125% Sep-35 I/L gilt.
- This will leave focus on U.S. tariff decisions and data for much of the session.
CROSS ASSET: Bund is leading gains in Core Bonds
- Treasuries are starting to get dragged higher, European Govies lead, as Bund closed its Opening gap earlier.
The Immediate area of interest for Bund is still at 129.54/129.60. - For the US Tnotes (TYH5), while the March high is at 112.01, the March and the 2025 low in the 10yr Yield of 4.1040%, would equate today to 112.03+.
- US Emini is starting to tilt to the downside.
- USDJPY is paring some gains taking its cue from the move in Yields.
US TSYS: Supported By Screen Buying Programme, Liberation Day Outcome Eyed
Tsys supported by the early downtick in European equities, with the impending “Liberation Day” tariff announcements out of the U.S. front of mind.
- Yields back to little changed on the day, with the Asia-Pac weakness, driven by reports pointing to Trump considering some slightly more lenient tariffs, reversed.
- TY futures comfortably within yesterday’s range.
- A screen buying programme across TU, FV & TY futures ahead of the European cash equity open plays into the bid.
