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Europcar update

26 February 2020 by jbchevrel

Europcar Mobility Group (EUROCA) is a French car rental company operating in 140 countries covering Europe, North America, Asia, and Africa. The CDS was a member of XOver series 29 and the current 32. Today the CDS closed -23bp tighter (at c450bp) while XOver s32 fair value closed +6 wider. The CDS is not very liquid (we receive 25bp-wide bid-offers) but looks tight vs cash, as, indicatively the z-spread on the 4.125% nov24s is in the area of 575bp. Q4 earnings yesterday were in line with the downgraded guidance at the October profit warning, with less of a debt increase than expected. EBITDA was down -26% to €34m, margin down -200bp to 4.1%. This fall was despite slightly higher utilization (at 72%), due to higher costs. FCF was up to €9m yoy vs a €33m outflow in 2018. Net debt was reported at €880m after the Fox acquisition and putting leverage at 3.2x. Moody’s expect metrics to remain weak through FY20 and views adjusted leverage of >5x. Liquidity has improved from Q3, cash closed Q4 at €625m vs €450m in Q3. The name is under negative outlook from both S&P’s and Moody’s.