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Catching Up

15 October 2019 by jbchevrel

Novafives S.A.S. (NVFVES) is a French industrial engineering Group that designs and supplies machines, equipment and production lines for industrial groups (metals, autos, aerospace, cement, energy..). Historically, it has contributed to the first steam locomotives, the Alexandre III bridge, the metal framework of Orsay station (now museum) and the elevators for the Eiffel Tower. The company is private and has ~€425m shareholder equity. A crossover member since s22 included, the CDS (closed ~800bp today) is the #5 widest name in s32. The 5y CDS has tightened by -15bp today, after opening slightly wider on the back of S&P following Moody’s in downgrading the name from B+ to B overnight. Later in the session, positive Brexit news dominated and the benchmark crossover s32 tightened by ~-10bp and its NAV tightened by ~-5bp. Moody’s had downgraded the company by one notch to B3 - negative outlook, at the end of last month, citing weak cash flow, still weak liquidity position (~€150m cash), declining orders and rising leverage (Co has a turnover of about €2b, generating an ebitda of ~€125m vs €700m debt so ~€575m net debt so ~4.5x net leverage). The bonds were downgraded to Caa1. Before that, the previous downgrade by Moodys had been in September 2016, to B2. Other than that, S&P has them rated B+. Consistently with the CDS, the cash was stable, a tad below 82 on the 5% June 2025s. In terms of debt split maturity split, it has ~€100m maturing in 2024 and the biggest part of it, €600m in 2025 (5% coupon €325m fixed and €275m floating). The name still displays a negative basis, the 20jun25 CDS is paying ~840bp vs a Z spread of 920bp for the 5% 15Jun25s.