08 March 2018 by lberuti
The sector which bore the brunt of the pain yesterday was debt collection. The focus changed today and retailers were under the cosh. UK retailers were penalised by John Lewis’ profit warning even if their 5-year CDS suffered less than their equities. But the main casualty was the COFP ( Casino Guichard Perrachon SA ) / RALFP ( Rallye SA ) complex. COFP announced 2017 results that met headline guidance, but only with the help of favourable currency impact and non-recurring tax credits in Brazil, which they excluded from their 2018 guidance. That led some analysts to consider that “COFP includes these benefits in headlines when they work in their favour”, but “exclude them when they work against them”. It is not the first time people have argued with the company for more transparency and consistency. Aggressive accounting practices are not really flavour of the day, and COFP was not given the benefit of the doubt. Its shares and RALFP’s were sent tumbling. Its 5-year risk premium was marked-up 9bps at 186bps, while RALFP’s was 54bps wider at 850bps.