Cheplapharm Arzneimittel : Chepla upsizes and prices new 2031 SSNs: we adopt a Neutral recommendation

Cheplapharm (CHEPDE, B3/B) priced the new 2031 SSNs (refinancing the 2027 SSNs) and upsized the issuance to EUR 750m from EUR 500m. The overfunding bolsters liquidity (think about the 2028 maturities) and/or is potentially used when Chepla will be restarting the M&A strategy at one point, while meanwhile accepting the negative carry on the overfunding.
We required a minimum yield of 7.5% for the new 2031 SSNs. The final yield of 7.125% is below our requirement. The yield of the existing 2030 fixed SSNs dropped also already after we adopted a Buy recommendation the other day. While there is still a pickup, we deem this not to be sufficient. As such we adopt a Neutral recommendation now. The market seems to be very positive on Cheplapharm albeit there was not much achieved yet in terms of completing the transformation process.