Ardagh : Update on the credit following strong H1 2017 results

Publication date 01 September 2017 - Writing date 30 August 2017 - - - - - - - - - - - - - - - - - - - - In this note, we shall take a fresh look at Ardagh's credit following the publication of good H1 2017 results and the great run of its euro-denominated notes since their issuance. In a fairly steady market, the group delivered a strong first-half operating performance, underpinned by the integration of Ball/Rexam's assets. Its credit metrics also benefited from the IPO that took place in March and the various refinancing operations carried out since the beginning of the year. We cheer the resilience of Ardagh's businesses and believe it will be able to pursue its deleveraging in the quarters ahead. We reiterate our Positive credit opinion on the issuer. Against this backdrop, Ardagh's euro-denominated notes have had a great run since their issuance and are currently trading at less attractive yields than comparable bonds. We believe that the potential for outperformance is now more limited and are lowering our recommendation to Neutral. In the packaging sector, our preference goes to the 7.250% 2023 and PIK 8.250% 2022 Verallia notes, on which we have a Buy recommendation. - - >