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Will Ladbrokes Bet Their Future On Gala?

23 June 2015 by lberuti

Even though the credit market was a tad volatile, it was very much in consolidation mode after yesterday’s hectic rally. While they were taking their breath back, investors were also able to have a closer look at some special situations. And, if the general direction still pointed to tighter risk premia (the fair value of iTraxx Corssover was 6bps tighter at 292.5bps and the fair value of iTraxx Main was 1.5bps tighter at 63.25bps), a handful of names were indicated wider. LADLN (Ladbrokes Plc) for instance saw its 5 year risk premium increased by 14.5bps to 252bps. The company confirmed talks with Gala Coral regarding a possible merger are currently taking place. There are a number of possible scenarios depending on the price paid for Gala, the cash portion of the deal, and the entity that could issue debt going forward. Each of them can lead to very different outcomes regarding the risk premium of LADLN, ranging from virtually 0 to more than 500bps. Attention can still be paid to other pieces of news that the noise surrounding the Greek quagmire.