INEOS Group Holdings : Pricing of the new bond came below our FV estimates

IGH concluded its 5.5NC2 senior secured bond offering. The new bonds due 2031 were priced at par with a yield of 7.25%, being at the lower end of the price guidance (7.25-7.5%) and effectively tighter than IPTs (mid-high 7%s). The pricing is also slightly below our fair value estimates of at least 7.375%. The amount offered was upsized by € 150m to € 800m, showing continued good access to the capital markets despite the current chemical industry weakness. We believe that excess proceeds will be also used to finance the current P1 capex needs. The new bond will increase the company’s net annual interest expense to around € 910m according to our estimates, implying an interest coverage ratio of 1.85x on a PF basis.