Hints and tips:
...Others are relying on more backstops from governments, central banks and international organisations....
...For now, companies have access to liquidity and secured waivers to debt covenants....
...Notably, the bank lending standards have tightened appreciably in G-4 in Q1, driven by the US – see [below] chart....
...Looked at differently, Cyclicals are still priced for a V-shaped recovery, which might not happen....
...In 2016 the BoE introduced the Term Funding Scheme to help shield banks from the adverse consequences of a BoE rate cut to 0.5%....
...Ibstock has already secured covenant amendments with its lenders (e.g. end-2020 leverage test replaced by a liquidity test, June 2021 leverage covenant amended to 3.75x from 3x)....
...its banks .….but its shares haven’t....
...To sellside, and Metro Bank goes down to “sell” at Investec. The upshot is that in spite of everything it remains as close to becoming a functioning metro as a functional bank....
...RTN has a £220m bank facility and a £225m bond (relating to Wagamama). There is no covenant on the bond debt, other than paying the interest....
...Within the large-cap banks, we see a superior risk/reward, and greater absolute upside, for Lloyds (Buy) and HSBC (Buy), while OneSavings Bank (Buy) remains (by far) our preferred play within the wider sector...
...The covenant waiver secured from the group’s banks is (quite literally) critical, and buys the time to navigate what looks to be a dramatic - but hopefully fairly brief - dislocation in MRO’s key markets...
...Suntrust also provides covenant details. It’s bleak stuff: • CCL: 2019A EBITDA to consolidated net interest ratio was 30:1 vs. its covenant of 3:1 vs. our 22:1 estimate (2020E)....
...The group did not declare an interim dividend, as expected, in line with the Bank of England’s requirement that the large UK banks should not make any distributions to shareholders during calendar 2020....
...Rate relief drops away in FY22 so the recovery profile, in EPS at least, is not V-shaped....
...Metro Bank goes onto the “buy” list at Investec. Analyst Ian Gordon reckons it’s now cheap enough to offset the fact that it’s Metro Bank....
...The statement highlights the increasing likelihood that intu will require covenant waivers or government support to avoid significant covenant breaches. .......
...We also think the sector is much less disrupted than banks....
...Cineworld’s own covenant stands at 5.5x, vs 3.4x currently. The leverage rises to just above 4x on a proforma basis if we include the Cineplex acquisition....
...Net debt to EBITDA stood at 0.7x in 2019 well below the group financial covenants of <4x. The group also benefits from GBP85m of undrawn credit lines expiring in 2022....
...Last CINE update: Liquidity extended, covenants waived. CINE’s 28 May update showed that lenders will waive leverage covenants....
...Creditors may be able to force this because Premier would likely breach its 3x ND/EBITDA covenant....
...Rotork has the single largest exposure in our coverage (~50% v 60% in 2014 though)....
...Against the general trend, yesterday Ferrari confidently guided to a V-shaped recovery in its P&L from H2/20....
...When we come out of this period of lockdown, we believe it will be into a V-shaped recovery (which remains our core case), and we will eventually end up with higher inflation as governments and central banks...
...DC expects to comply with bank covenants unless all operations close for an extended period....
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