EU TECHNOLOGY: Worldline: S&P Double Notch Downgrade
(WLNFP; NR/BBneg/NR)
https://www.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3429308
Downgrade driven by weak operational performance. They note still no actual evidence around the AML and fraud allegations. The ongoing investigation could result in negative rating action though they consider this unlikely. Curve is widening further despite sitting near B- levels; lines look close to 1pt lower.
- Double-notch downgraded from BBB- to BB with negative outlook maintained.
- S&P see FY revs -2% with EBITDA margin trending from 19.2% in 2023 towards 10%.
- FY EBITDA seen <€500mn from >€1bn; margin far below peers' 30%-50%
- S&P-adj leverage to rise from 3.9x at FY24 to 4.5x this year. FOCF to breakeven.
- Downside on leverage remaining >4x or FOCF <10% of debt.
- Upside on leverage sustainably <4x and FOCF >10% of debt.
- “Our base case for 2026 assumes stabilization of organic revenue, a decrease in restructuring costs, and cash inflow from asset disposals.”
- “However, we see downside risk to our forecast, and deleveraging could take longer than expected if Worldline fails to recover topline growth”
- “We have revised our Management & Governance (M&G) modifier to moderately negative from neutral, reflecting a series of profit warnings.”
- “Although less likely, we could also take a negative rating action if the ongoing investigations result in a negative impact on our forecast or our view of the M&G score.”
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US TSYS: Early SOFR/Treasury Option Roundup: Heavy Low Delta Aug'25 SOFR Puts
SOFR options seeing heavy low delta put volumes ahead the NY open, otherwise, more consistent call trade on lighter volumes in SOFR & Treasury options reported. Underlying futures weaker but off overnight lows. Projected rate cut pricing cools slightly vs. late Tuesday (*) levels: Jul'25 at -1.2bp, Sep'25 at -15.7bp (-16.1bp), Oct'25 at -28.7bp (-28.9bp), Dec'25 at -45.6bp (-46.2bp).
- SOFR Options:
- Block/screen, +103,000 SFRQ5 95.62 put, cab
- Block/screen, +8,284 0QQ5 97.00/97.25 call spds, 3.0
- 2,000 0QZ5 98.00 calls ref 96.865
- 2,000 SFRX5 96.31/96.50 call spds ref 96.11
- 7,200 SFRU5 95.62/95.68 2x1 put spds, 0.5 ref 95.835
- 10,000 0QQ 96.87 calls ref 96.785
- 3,000 SFRU5 96.00/96.37 call spds, 1.75 vs. 95.845/0.05%
- +2,000 SFRU5 96.00/96.25 call spds, 1.5 vs. 95.845/0.05%
- Treasury Options:
- +2,000 TYQ5 111 straddles, 26
- +2,000 TYQ5 111/111.5 1x2 call spds, 10
- -1,500 TYU5 111/112.5 call spds, 34 vs. 111-05.5/0.32%
- -1,500 wk5 TY 111 puts, 20 vs. 111-02.5/0.43%
- -1,500 TYU5 109 puts, 7
EURIBOR OPTIONS: ERZ5 98.25/37/50/62 Call Condor Lifted
ERZ5 98.25/37/50/62 call condor paper paid 3 on +6.5K.
FOREX: AUD Uptick Firms Further on Break of $0.66
- AUD clearing 0.6600 at typing, with the uptick accelerating on the break of a cluster of resistance into 0.6595. Above here, resistance is scant until 0.6688, the Nov 07 high, printed shortly after the US election last year. Additionally, 0.6700 represents the 76.4% retracement of the Sep 30 '24 - Apr 9 bear leg.
