The pendulum in auto parts

Last May, the auto parts sector had experienced a shift from stress to euphoria. At that time, in our coverage, 24% of bonds were priced above par, while 71% were priced below par (of which 72% were above 95). Only 4% of bonds were categorized as being priced in the stressed category. Nevertheless, the situation has not improved; it is even worse today . In our current coverage, 47% of bonds are priced above par, while 51% are priced below par (of which 24% are above 95). Only 2% of bonds are categorized as being priced in the stressed category. However, we are still in euphoric territory given the auto sector's ongoing challenges – including auto tariff uncertainty, a high risk of volume declines, structural changes, and competitive pressure from China – as the risk of missing opportunities likely outweighs the risk of losing money . We anticipate that downgrades in OEMs' revenue guidance will exert additional pressure on suppliers' credit profiles and result in delays for certain strategic restructuring initiatives. In relative value, we are sellers of the Forvia 5.125% due in 2029c26 and the Valeo 4.5% due in 2030 c30 , while we are buyers of the ZF 7% due in 2030 c30 …