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Navistar International 09-29 02:42 GMT  
(Report with Analyst's Data Sheet) 
Short interest on Navistar stock has plunged over the past month to 2.64%--the lowest in years--and its bonds are now approaching par versus 65...
Feelin' The Love by Vicki Bryan
Kroger 09-29 02:26 GMT  
(Report with Analyst's Data Sheet) 
Kroger's stock price has suffered since the company reported its second quarter results and lowered its full year earnings and sales guidance. The company cited a...
Deflated by Carol Levenson, CFA
Walt Disney 09-29 02:13 GMT  
(Report with Analyst's Data Sheet) 
According to a Bloomberg report, Walt Disney is working with an adviser to consider a bid for Twitter. Other companies, including Salesforce.com and Google,...
Is Disney Following Twitter? by Dave Novosel, CFA
Gold Fields Ltd 09-28 22:39 GMT  
(Report with Analyst's Data Sheet) 
In the wake of last week's decision by the Federal Open Market Committee to leave the federal funds rate unchanged, gold prices remained at the levels...
In Great Shape by Alexandre Dray
Chesapeake Energy 09-28 19:52 GMT
(Comment)
Yesterday, Chesapeake Energy released the final results of its cash tender offers for up...
Tender Offer by Philip C. Adams, CFA
Yesterday, Chesapeake Energy released the final results of its cash tender offers for up to $800 million of non-convertible senior notes, with maturities from 2017-2023. Total principal of bonds tendered and accepted was just under $898 million (e.g., CHK's gain on the tender was about $98 million), with annual interest on the tendered bonds of about $46.4 million versus $64 million incurred on the 8% debt issue funding the tenders, a net increase of $17.6 million. Recall the previous tender of contingent convertible senior notes (which were subject to par puts in 2017 and 2018) resulted in about $708 million of bonds (out of $1.045 billion) being redeemed for $699 million. The net increase in annual interest expense on this tender was $36.5 million, for a combined $54.1 million increase in interest. But the point was to reduce near-term maturities, and toward that end CHK was modestly successful. 2017 maturities (assuming "puts" would be exercised) were reduced from $1.383 billion to $722 million; 2018 maturities from $846 million to $667 million; 2019 maturities from $949 million to $444 million; and 2020 maturities from $1.124 billion to $833 million. That 2017 "nut" still looks tough to crack (absent a major asset sale for cash), and by 2020 we would expect the market will be materially improved. So we are a little puzzled at the tender structure -- we would have thought taking out the 2017 maturities would be a higher priority than showing a gain on the tender of longer maturities.
DTE Energy 09-28 15:50 GMT
(Comment)
At the end of June, we expressed concern that DTE's plans to invest $2.6-3.5 billion in non-utility...
Ratings Action by Philip C. Adams, CFA
At the end of June, we expressed concern that DTE's plans to invest $2.6-3.5 billion in non-utility projects over the next five years, combined with growing capex in its utilities and its focus on dividend growth, might make the company "a bit too MLP-like." Monday, DTE announced it is purchasing midstream assets in the Marcellus-Utica shale plays (Pennsylvania and West Virginia) for a combined $1.3 billion. The transactions are expected to close in October, and $1.4 billion of bridge financing has been arranged. Permanent financing will consist of about 50% of senior unsecured debt at the DTE holding company, and 50% equity-linked (subordinated) notes (e.g., all interest-bearing instruments). We'll have more to say in an upcoming report, but the rating agency responses are instructive, even if as we would have expected. Moody's (whose low single-A ratings on DTE holding company senior unsecured bonds was the highest) placed its rating under review for a possible one-notch downgrade, leaving subsidiary utility ratings untouched. S&P (whose mid single-B ratings were already the lowest) affirmed all DTE ratings with a stable outlook. Fitch (whose "high triple-B ratings were the second-highest) changed the outlook for holding company and DTE Electric ratings to negative, leaving DTE Gas ratings "stable". The rationales vary a bit, too, with Fitch obviously linking the fortunes of the holding company and DTE Electric more tightly than the others, probably because of the utility's dependence on the holding company for equity to support its own capex requirements. Future expectations about how significant DTE's midstream involvement will be (to be part of its Gas, Storage and Pipeline, or "GSP" segment) also vary a bit. Fitch expects the percentage of EBITDA to be derived from utilities to decline from 84% in 2015 to 80% in 2019. S&P's base case is also 80%, while Moody's notes that 85% of FFO is currently generated by the utilities. DTE's presentation slides suggest a willingness to let the utility share decline to 75%. Moody's is more concerned about holding company debt as a percentage of total DTE debt (rising to over 30%, before conversion, versus 22% at YE2015). Benchmarks and expectations for FFO/TD (or the inverse) vary a little, with S&P forecasting FFO/TD ranging between 16-17% for the next several years, with 13% a likely downgrade trigger and 23% the minimum threshold for an upgrade. Meanwhile, Moody's says closing the acquisitions will result in a one-notch downgrade, while a decline in FFO/TD "below the high-teens range" could result in an additional downgrade (query whether 16% is "high" or "mid-teens"?) Fitch is the most optimistic in its projections, estimating 2017 TD/FFO of 5.0x (e.g., FFO/TD of 20%) from 3.6x (28%) currently, improving via new project cash flow to 4.6x in 2018 and 4.3x in 2019. Our recent experience with midstream and pipeline companies is that there is always another project to interfere with the deleveraging forecast. Few DTE bonds trading so far, but DTE Electric (opco) 4.3% FMBs due 2044 appear to be 4 bps wider today at T+110 bps (Z=172). The last trade of size of DTE holds 3.3% notes due 2022 was 9/19 at T+94 bps (Z=89). More in a future report.
GOL Linhas Aeras Inteligentes SA 09-28 15:12 GMT  
(Report with Analyst's Data Sheet) 
The bonds and the stock of GOL Linhas Aeras Inteligentes S.A. (GOLLBZ) have rallied hard since the beginning of July. There are...
Fasten Your Seatbelt by Cedric Rimaud, CFA
Evergrande Real Estate Group Ltd 09-28 14:10 GMT
(Comment)
Today, China Evergrande Group announced a plan to dispose its non-core...
Asset Sale by Nuj Chiaranussati
Today, China Evergrande Group announced a plan to dispose its non-core assets, including businesses in Grain & Oil, Dairy products, and the Springwater business, to the tune of CNY2.7bn. According to the payment terms, however, about 10% of the value will be paid within 3 days and the remainder to be paid in 3 annual installments. Thus, while the announcement today was somewhat positive as it will allow the company to refocus back to its core business, we do not expect a near-term impact on the cash inflow from these sales. Our concerns with EVERRE were not only its aggressive expansion in property development but also its fast growing non-core businesses, which were largely funded by its high-cost borrowings. In addition, the company still holds stakes in media, cinema, beauty and football businesses, which had not provided the company with visible earnings.
Neiman Marcus Group 09-28 03:21 GMT  
(Report with Analyst's Data Sheet) 
Neiman Marcus posted another weak quarter that led to a disappointing full fiscal year 2016 (ended July 30). The company's same store sales...
No Big Deal  by Kim Noland
Votorantim Participaçoes S.A. 09-28 03:16 GMT
(Comment)
Votorantim Cementos S.A. is launching a $500 million 10-year senior...
New Issue by Cedric Rimaud, CFA
Votorantim Cementos S.A. is launching a $500 million 10-year senior unsecured bond, which will rank pari passu with existing bonds, at a price talk of 6.25%. The issuer is St. Marys Cement Inc., a fully-owned subsidiary headquartered in the USA, and Votorantim Cementos S.A. is a guarantor. We had changed our recommendation to "underperform" in late April when the bonds were yielding of 6%, finding little value for a company that remains exposed to the poor fundamentals of the Brazilian economy, affecting its profitability, and is investing into new areas, like wind power, leading to a free cash flow shortfall. The 2Q16 results have shown a stable reported leverage at 2.8x and a continued fall in reported EBITDA. With 46% of its funding done through bonds, Votorantim is taking the opportunity of low historical yields to refinance some of its shorter dated bonds. With BRL5.4 billion of debt due by the end of 2018 against BRL8.3 billion of cash and BRL3.9 billion of revolving credit (as of June 2016), investors can take comfort of favorable liquidity conditions and relatively conservative credit metrics. The yield on VOTORA 4.75% Jun-2024s has rallied from a high of 9% in early March to 5.4% now, offering 125bps more than the Brazilian sovereign bonds in USD, the average of the last two years. With 2024s yielding 5.4% and 2041s at 7.3%, the fair value on a new 10-year bond is around 5.75%-6.00%. Offered at a concession, these new bonds are an attractive switch for a core holding, but we reiterate at "underperform".
Occidental Petroleum 09-28 03:13 GMT  
(Report with Analyst's Data Sheet) 
We're updating our views on Occidental Petroleum, providing highlights and guidance from second quarter results, and with an eye on recent energy...
Testing The Umpire by Philip C. Adams, CFA
Credit Suisse Group 09-28 03:06 GMT  (Report)
The European bank sector has been rattled again over the past few weeks by the news that the Department of Justice is asking for a $14 billion...
De-Risking by Kathleen Shanley, CFA
General Cable Corporation 09-28 02:26 GMT  
(Report with Analyst's Data Sheet) 
Although General Cable (BGC) posted soft results for the second quarter, the company continued to make progress with its "roadmap" to...
Making Progress by Evan Mann, CFA
Tata Steel Limited 09-27 15:24 GMT  
(Report with Analyst's Data Sheet) 
Despite the challenging environment of weak demand for steel products, Tata Steel Ltd (TATAIN) reported a decent set of results for 1Q17 on the back...
A Matter Of Time by Nuj Chiaranussati
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EVRAZ 09-27 
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Williams 09-09 
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Sep 27, 2016 | The Wall Street Journal
CR on Brazil's Samarco Mineracao Bonds Plummet After Missed Interest Payment Q - "We expect both bonds not to pay their coupon. A restructuring is becoming necessary."
Sep 26, 2016 | WSJ Pro Bankruptcy
DN on A Dell of a Lot Bigger Q - Dell report featured.
Sep 26, 2016 | Barron's
CL on These Investors Are Glad Pfizer Has Decided Not to Split Q - Gimme Credit also upgraded the bonds to stable from deteriorating.
Sep 24, 2016 | Barron's
CR on Brazil's New Leaders Court Foreign Investors Q - "Gimme Credit lifted Petrobras' bond outlook."
Sep 23, 2016 | Barron's
CR on Petrobras: Another Asset Sale; Shares Drop 4.5% Q - "The state-run oil company's plan - to reduce debt while slashing spending by 25% - supports bond prices."
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