Beni Stabili : Issuance focus

Beni Stabili is preparing an unsecured bond issuance of at least € 300m with a 5-7 year maturity. The group plans to include a covenant i.e. an amount of unsecured assets at least equal to the amount of unsecured debt, together with a change of control provision at 101% of par, a make whole and a clean-up call (at 80%). The purpose of this issue is to refinance existing debt and finance the group's general needs. We recommend subscribing to the new issue from ASW+90bp for a 5-year maturity and ASW+110bp for a 7-year maturity.Moreover, we are lowering our recommendation to Neutral (vs. Buy) on the Beni Stabili outstanding straight bonds given yields are no longer attractive in our opinion (see table on page 5) and low liquidity on certain bonds (outstanding amount of only € 125m for the 2022 bond).Lastly, we are lowering our recommendation to Neutral (vs. Buy) on the 2021 convertible bonds, which are no longer interesting in our view 1/ neither from a credit standpoint( -0.3% negative return), 2/ nor from an equity perspective (discount to net asset value of only 10% vs. an average of around 30% historically – see chart in the appendix). Note that we had raised our recommendation on this instrument at end-2016 when yield was +2.0% and the share was trading at € 0.54 (vs. € 0.73 today).>