28 November 2018 by lberuti
The day started with little trading activity and with a reasonably strong tone to it. Clients were not really keen on buying protection and dealers’ appetite to sell risk appeared to have been satiated during previous sessions. On the flip side, there was little risk addition either and gradually the sentiment changed. It was not helped by another name blowing up in the European High Yield space. NVFVES (Novafives), the French engineering group, reported weak third quarter results and covenant net leverage at 5.8 times up from 4.8 in the second quarter. In their outlook, the management said they expect the logistics division to keep growing fast, but Ebitda margin guidance for 2018 was revised down to 5% with full year sales maintained at €2Bln. The company’s bonds got punished and were indicated approximately 6pts lower on the day. Bearing in mind that these bonds had already lost something like 10pts ahead of the numbers since mid-November, it shows once again how traitorous the High Yield market is at the moment.