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Not Out Of The Wood Yet

10 October 2016 by lberuti

Since MTNLN (Matalan) was introduced in the iTraxx Crossover index, it has not been a walk in the park for the faithful investors who remained committed to the company’s debt. There have been many ups and downs... mainly downs. Hence the results the company published today came as a relief. In the quarter which ended August 2016, MTNLN reported EBITDA that came ahead of analysts’ expectations and gross profit recovered strongly from a year before (from a low base though, as the reference period saw the biggest decline in profits due to distribution centre issues). MTNLN’s bonds first rose as much as 3pts, before settling around 2pts higher on the day following a slightly less constructive management call. CDS on its side held to its gains and closed 3.5pts lower at 35pts upfront plus 500bps running. Meanwhile, the broader credit market proved resilient. In the absence of the US and without any macro news to push them meaningfully one way or the other, gravity progressively took hold and after an unchanged open, European credit indices closed a tad tighter across the board.