Ceramtec : Issuance Focus

Credit opinion: Stable CeramTec is a company where bond investors buy the business model and forthcoming recurring and sound performance. The capital structure and subordination for them will likely leave little or no recovery value at all in a severe situation. But the company’s track record is convincing and it has been able to grow its EBITDA stronger than its revenue in the last years. Its cash flow profile, even at the high leverage, allows for de-leveraging if free cash flow won’t be used for acquisitions or dividends, for which baskets exist.Our greatest concern is that industry consolidation in the medical devices space and more stringent regulatory rules (cost control) could reduce pricing power and dent profit margins going forward. We are not able to assess this adequately in the moment.>