EU CONSUMER CYCLICALS: VF Corp | Revolver secured
(VFC: Ba1/BB)
VF has secured its previously $2.25b senior unsecured revolver, in exchange for looser covenant language. The company said yesterday it “may” draw on the facility to help meet the €500m Mar-26 maturity. Its ~$4b in bonds remain senior unsecured.
Covenant: The Company will not permit the ratio of Consolidated Net Indebtedness to Consolidated Net Capitalization... to be greater than:
(a) 0.70x through Sep-24,
(b) 0.65x through Sep-25, and
(c) 0.60x thereafter.
We see it at 0.72x without adjustment.
Equities closed -16% (~15x training P/E, $4.7b market cap vs. $4.9b net debt).
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Historical bullets
GILTS: Twist Steepening Early Today, Dovish BoE Repricing Extends
Dovish repricing in BoE-dated OIS supports the front end of the curve, while weakness in long end Tsys since Thursday’s close weighs on 10+-Year gilts.
- Futures 92.25 last (92.09-40 range).
- Initial support and resistance unchanged at 91.73/92.63.
- Yields are 3bp lower to 3bp higher, curve twist steepens.
- 2s10s ~10bp below cycle closing highs, last 68.2bp.
- 5s30s ~2.5bp below cycle closing highs, last 133.1bp.
- Risks seem titled towards continued steepening given the UK’s economic and fiscal fragility, while the macro environment adds further weight to that view.
- Illiquid market conditions in the long end and spill over from Tsys have provided further sources of pressure in recent weeks.
- BoE-dated OIS now showing 91bp of cuts through year-end vs. 88bp early today.
- Little of note on the UK calendar on Tuesday, which will leave post-holiday adjustments and macro cues at the fore.
- In addition to the Wednesday risk events outlined in our GBP STIR bullet, note that tomorrow will see the release of public sector finance data and the resulting DMO remit revision. We will provide greater colour on this later today.
SILVER TECHS: Holding On To Its Recent Gains
- RES 4: $36.000 - Round number resistance
- RES 3: $34.903 - High Oct 23 ‘24 and the bull trigger
- RES 2: $34.590 - High Mar 28
- RES 1: $33.117 - 76.4% retracement of the Mar 28 - Apr 7 bear leg
- PRICE: $32.476 @ 08:23 BST Apr 22
- SUP 1: $30.577/28.351 - Low Apr 10 / 7 and the bear trigger
- SUP 2: $27.686 - Low Sep 6 ‘24
- SUP 3: $27.180 - Low Aug 14 ‘24
- SUP 4: $26.451 - Low Aug 8 ‘24 and a key support
Silver is holding on to the bulk of its recent gains. The latest recovery undermines a bearish theme. Price has traded through an important resistance around the 50-day EMA - at $32.269. The break higher signals scope for a test of $33.117, a Fibonacci retracement. Clearance of this level would strengthen a bullish condition. On the downside, initial firm support to watch lies at $30.577, the Apr 10 low.
GILT TECHS: (M5) Corrective Gains
- RES 4: 94.50 High Apr 7 and key resistance
- RES 3: 93.44 76.4% retracement of the Apr 7-9 sell-off
- RES 2: 93.00 Round number resistance
- RES 1: 92.63 High Apr 8
- PRICE: 92.28 @ 08:01 BST Apr 22
- SUP 1: 91.73/91.43 Low Apr 17 / 15
- SUP 2: 90.47/89.99 Low Apr 11 / 9
- SUP 3: 89.68 Low Jan 15 (cont)
- SUP 4: 88.96 Low Jan 13 and a key support (con)
A sharp sell-off in Gilt futures between Apr 7 - 9 continues to highlight a bearish threat and recent gains are considered corrective - for now. The contract has recently breached 90.55, the Mar 27 low. Clearance of this level confirms a full reversal of the Mar 27 - Apr 7 rally. Sights are on the 90.00 handle next, briefly pierced on Apr 9. A clear break of it would open key support at 88.96, the Jan 13 low (cont). Initial resistance is 92.63, Apr 8 high.
