Wepa : Wepa brings new 2032 SSNs

Wepa is in the market with a new 7NC3 paper to refinance the 2027 bond. The transaction is basically leverage-neutral. Starting net leverage is 2.2x. Wepa comes earlier to the market than we thought. We believed early 2026 would be the preferred window, but Wepa says it is an opportunistic step, which is reasonable. The new paper will increase the cash interest by +/- EUR 8m p.a. We see Wepa further as a high-quality high yielder with a robust business model, strong market positions and high market shares in key markets, which offset the associated disadvantages of the large production footprint in Germany, and supported by family ownership and a strong management team.

The current negative earnings trend is not worrying us: Wepa’s performance is normalising towards the long-term 13-14% adj. EBITDA margin guidance (it reached 13.3% in Q3 25). The company was always open about that fact, therefore we do not see the Q3 25 results as weak per se. Gross profit levels are solid, but there are inflationary elements within OpEx, which maybe need to be addressed by pricing at one point. Capex will be elevated in FY 25 and FY 26 due to an expansion project in the UK, which adds about 30k tons of finished products capacity. At “normal” capex spending of EUR 90m p.a. it is still a levered free cash flow producing company (EUR 30-50m ballpark).

Our Credit Opinion remains Stable.

We would subscribe to the new paper at yield of 4.75% or more (IPT: 4.75% to 5.0%). We affirm our Buy recommendation on the existing 2031 SSNs, which widened first post the new issuance announcement and became tighter again thereafter. But there is still a good spread vs. peer bonds.