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Auchan Deleveraging

19 October 2020 by jbchevrel

Today in € HY CDS space, some of the most COVID-sensitive names had a relief rally, thanks to better global risk sentiment. It was the case of Stonegate and TUI, both tighter by about a point. Auchan CDS was also among best performers. Auchan CDS is a member of XO since s32 and was in Main before that. Today Auchan CDS tightened -24bp to close at 140bp. This move came after Auchan's sale of 36.18% in Sun Art. That deal does achieve the France-based retailer’s deleveraging plan. That is expected to help them address the €11b debt pile and >4x leverage. Auchan will raise €3b from the sale, with Alibaba (BABA) taking control of the Chinese retailer. That is a new strong step in the deleveraging process although that had already started. Indeed, Auchan has reined in capital spending, and the Mulliez family won't pay itself a dividend for the next 2 years, in order to support liquidity.