UPDATE: Why we're still keen on our corporate bond picks — #SaxoStrats
Vallourec 2.25% September 2024
The price of the bond rose marginally. The company is still running at full capacity in the US and improving oil prices may lead to new projects in the Middle East, which is a more lucrative market than the US. Although the company may run with a negative operating profit margin for another year, it has no repayments until 2019 and it has 2bn euros of undrawn revolver credit facility. The company has recently received a bid for its “drilling products” business for a cash amount of US$63m.
The African supranational bank is rated much lower than its peers due to the fact that it is active in high-risk region. Afreximbank has extended a 1.5bn USD dollar facility in Zimbabwe and it is planning to lend $500m to Egyptian banks in 2018. African countries have been successfully borrowing through the international markets in the past few months, taking advantage of low interest rates.
Altice has been a rollercoaster. After Q3 results revealed higher leverage, the founder of the company has come back in an attempt to reorganise the company and work on capital structure. The first big debt repayment is in 2022, which gives space to the company to tackle its capital structure and operational issues. Altice has announced the sale of its Swiss business and it’s considering also selling the French Towers and Dominican Republic interests in an attempt to deleverage the business. At the same time, the company is looking to develop French fibre-optics and Altice USA Charter Communications and Comcast Cable have reached a preliminary pact to form a new interconnet in the New York market.
The stock was sold off at the end of November and then recovered last week. From a credit point of view, the company is still sound, net debt negative and growing, thanks to its dominance of China’s online social network. Although China is experiencing a slowdown, the company is in a good position to expand its product offering and monetise through various online products.
Valeant Pharmaceutical has worked hard in order to stabilise its core operations and has been able to issue 8NC4 with a 9% coupon and 2020 maturity in order to refinance near-term debt maturities. Valeant has the biggest contact lenses business in the world that is growing quickly in China and this may have a positive impact on the company’s cash flow. Valeant remains highly leveraged and price appreciation will depend on the capability of the company to deleverage its balance sheet.