Cheplapharm Arzneimittel : Not fully over the hurdle yet, but we would subscribe to the new SSNs at minimum 7.5%

Cheplapharm launched an offering of EUR 500m senior secured notes due 2031. The company intends to use the proceeds from the offering of the notes, together with cash on balance sheet, to redeem the EUR 500m 3.500% Senior Secured Notes due 2027 in full and pay costs and fees in connection with the offering.
Credit Opinion: We expect Chepla to reach calmer waters now despite the execution risk around the transformation program, may setbacks the group will face and generics (pricing, margin) risk around Zyprexa.
As such we change our Credit Opinion from Negative to Stable.
Recommendations:
CHEPDE 3.500% 2027: No recommendation (vs. Reduce), given the anticipated refinancing.
CHEPDE 4.375% 2028: Neutral (vs. Reduce). We find the 2030 bond more attractive.
CHEPDE 7.500% 2030: Buy (vs. Reduce). The instrument has the same workout date as the 2028 bond but offers c. 190bp more.
CHEPDE Floater 2030: Neutral (vs. Reduce). There is a potential headwind from the ECB agenda, particularly also vs. the 2030 fixed notes.
New 2031 SSNs: We recommend subscription at a yield of minimum 7.5% with reference to the 2030 fixed note plus duration risk.