Paprec : Issuance Focus

Paprec is returning to the bond market to issue € 850m in two tranches, with five- and seven-year maturities. Proceeds will be used to refinance the two bonds issued two years earlier, which have high coupons of 6.5% (€ 300m, 2027) and 7.25% (€ 500m, 2029), respectively. The aim is to extend the group's maturities but also to capitalise on lower interest rates and tighter spreads to refinance under better conditions and thereby reduce interest expense. The PAPREC 2027 and 2029 notes are expected to be repaid ahead of maturity using their prepayment provisions at 103% on 10% of the outstanding amount and a make-whole call (at 50bp) for the remainder. The new bonds will also be issued in "green" format. Like their predecessors, they are senior secured and are rated 'BB' by S&P, i.e. at the same level as the issuer rating, with an estimated recovery rate of around 55%, whereas Fitch has assigned them an additional "seniority" notch and rates them 'BB+'.