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Lighter Is Faster

31 October 2018 by jbchevrel

Boparan Finance PLC (BOPRLN) tightened c60bp today, thus the best performer in iTraxx XOver, itself tighter c5bp due to stronger risk sentiment. This is after BOPRLN agreed to sell its Manton Wood sandwich business to Samworth Brothers. This new step in asset sales takes the total amount to £350M for the last 3 transactions. In short, that means largely enough cash to pay down the 5 ¼ 2019s (£250M). We may learn more on whether they pay 2019s early when we get their FY results (NOV 20). Therefore the cash yield curve massively bull steepened today (5 ¼ 19s -380bp 5 ½ 21s -105bp). Indeed, the question will likely become how will they pay the £600M of 21s. To answer this question, we will need to see other non-core asset disposals. The main candidates there include Foxes Biscuits, Donegal Catch (frozen fish), Holland Pies (pies and puddings) and the Christmas Pudding business. Elsewhere it has been a decently risk-on session which saw CDS indices tighten (Main -2.5 XOver -5.2 CDXIG -3.1 CDXHY -13.5) and shares rally (SPX +1.9% SXXP +1.7%), partially reversing OCT widening/losses.