Eroski : Initiating coverage with a Buy recommendation

Eroski has successfully priced its new € 500m senior secured bond due 15 May 2031, NC2, at par with a 5.75%. coupon. The IPT was initially announced at 6-6.25% before a price talk revised to 5.75-6.0%.
We find the terms highly attractive for this credit quality and are initiating coverage of the new bond with a Buy recommendation.
We believe the fair value should be closer to 5% and suggested 5.375% in our report published on 18 November 2025, already factoring in a yield premium to reflect a somewhat complicated history (but now a distant memory following the refocusing and deleveraging that has taken place), a name that is probably little known outside Spain in a competitive sector, and the group's somewhat unusual structure.
The issuance will generate € 25m in annual savings in interest expense on the bond, which will bolster an already healthy free cash flow and support further deleveraging.
Ratings agencies reacted positively (Moody's upgrade to 'B1/stable', S&P's positive creditwatch and Fitch's 'BB-/stable' rating). The group is expected to be upgraded to -BB-' by S&P following the bond issue.