Tereos : Update following profit warning

Publication date 16/03/2018 12:47 - Writing date 16/03/2018 12:26 - - TEREOS notes - / - - - - - - - - - - - - - - - - - The Tereos bonds were hit by the profit warning announced on 22 February 2018, with the 2023 notes shedding around 1.5 pts during trade and the 2020 notes about 0.5 pts. In a quieter market, they have caught up lost ground and are currently trading at spreads of 111bp (YTW of 0.7%) for the 2020 notes and 308bp (YTW of 3.4%) for the 2023 notes. - Fundamentally, despite the profit warning, our opinion on the credit still stands. We believe Tereos still has resources to safeguard its rating, and even in a low price environment, it has the capacity to generate positive free cash flow and thus limit the deterioration in its credit metrics. In the near term, however, the main focus of attention will be forthcoming earnings releases which should show quarter-on-quarter declines in EBITDA, with notably a steeper fall in H1 2018-19. - - >