19 September 2014 by lberuti
At the beginning of the week, TUIGR ( TUI AG) massively underperformed the market. During the week-end, they had reached an agreement on the terms of their merger with TUI Travel ( TUI Travel Plc), and they announced their intention to refinance a €600mln term loan by the issue of senior unsecured notes. The terms of the new issues were announce today. If the 5 year tranche came roughly as expected (not callable for 2 years and €300mln offered instead of the €250mln initially planned), the surprise came for the 7 year tranche that was simply cancelled. After having widened by 110bps from 211bps to 321bps between Monday and Wednesday, TUIGR’s 5 year risk premium was back to 280bps on the back of this issue downsize. That made TUIGR one of the outperformers of the day, and investors were able to pocket 1.5pt as the new issue traded above the issue price straight after the break, but it pales in comparison of the astonishing 30% day 1 performance of the Alibaba IPO.