Wepa : Wepa prices new 2032 SSNs and upsizes to EUR 500m

Wepa priced its new 2032 SSNs and upsized the issuance to EUR 500m from initially EUR 400m. The reason for this likely reflects the capex need for strategic projects in the UK, which will require elevated capex spending.

The final pricing at a yield of 4.5% is below what we deemed attractive (minimum 4.75%). However, the robust business model and the potential to generate material levered free cash flow make Wepa maybe still attractive for some investors, despite the adj. EBITDA margin normalisation.

Our Credit Opinion is Stable. Except for the elevated capex spending in FY 25 and FY 26, which will result in a temporary increase of net leverage, net leverage will on our calculation be trending at the lower end of the company’s guided corridor (2.0x to 3.0x).

We adopt a Neutral recommendation on the new instrument. The 2031 paper, which is assumed to be called in 2027, is still attractive for us.