Russia/Ukraine: Euro HY Credits We Like

CreditSights Staff

 

EXECUTIVE SUMMARY
  • In a follow-up to the “Euro IG Credits We Like” report published last week, in this piece we cut across sectors in the high yield space to look for HY credits we like.
  • Despite underperforming since the start of the Russia-Ukraine war, we highlight credits in which our analysts not only continue to see significant value, and where the fundamental momentum is a positive, but where we view wider spreads as providing an attractive entry-point/opportunity to increase exposure.
  • Of particular interest are the positive fundamentals at Titan Cement and ZF, and Altice France given their insulation from direct and secondary effects.
  • Cemex and Sappi benefit from pricing power, while OI Glass, Progroup, Loxam and Modulaire remain well positioned against higher energy prices and cost inflation. We also remain comfortable in our Buy recommendation on Kloeckner Pentaplast.
  • However, as a counterpoint to this cross-section of HY credits, we have taken the opportunity to remove our Outperform recommendation on INEOS Quattro.
RELATIVE VALUE

In a follow-up to the Euro IG Credits We Like report published last week, in this report we cut across sectors in the high yield space to look for HY credits we still like. We started by looking across credits with Outperform recommendations, and the credits that stood out as the most interesting to us were credits with Outperform recommendations that have underperformed – due at least in part to the Russia-Ukraine war and the associated risk-off. In this report, we highlight credits in which our analysts not only continue to see significant value, and where the fundamental momentum is a positive, but where we view wider spreads as providing an attractive entry-point/opportunity to increase exposure.

Positive fundamentals are on display at credits such as Titan Cement and ZF, while other credits have been running at high leverage going into the sell-off but remain insulated from direct and secondary effects such as Altice France.

Cemex and Sappi have EM exposure, so softness in recent weeks is understandable, but pricing power feeds into the ability for these credits to navigate the volatility.

Credits including

STRATEGY
Russia/Ukraine: Euro HY Credits We Like

CreditSights Staff

Russia/Ukraine: Euro IG Credits We Like

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