Picard : Initiating coverage of the newly issued SUNs with a Buy recommendation

Picard has successfully issued € 280m of 7NC3 senior unsecured notes at par with a 6.875% coupon. The IPT was announced at low 6.875% and the price talk was at 7% (+/- 12.5bp). We estimated the fair value at 6.75%.
The notes are rated Caa1/CCC+ (vs. a B2/B rating for the group) due to its structural subordination in the event of default. As such an event is unlikely to happen anytime soon, we believe the new notes offer an attractively priced entry point for eligible investors. into a traditionally expensive name on the bond market (the 2029 secured notes offers a YTW of 3.4% on the first call date and a YTC of 4.2% on the second call date in 2027.
Furthermore, following the exit of Lion Capital (who was highly focused on dividends), the new shareholders seem to be more deleveraging-oriented. We are initiating coverage of the newly issued 2032 SUN with a Buy recommendation