MS+165 IPT vs MS+135 FV: Mundys 5.7y SLB

29 Apr

Written By M N

Mundys (ATLIM, Ba1/BB+/BB+) launched a EUR500m 5.7y SLB at MS+165 IPT. Fair value derived from the issuer's own SLB curve sits at MS+131/133 mid, MS+135 bid. ADRIT OpCo curve confirms via a 32-38bp HoldCo basis. Real NIC at the expected launch zone of MS+130-135 is single digits, not the 30bp+ optical headline. Switch economics vs the existing Sep-31 line require a re-offer of at least +138 to clear the 3-month extension cost.

ATLIM SLB curve

Bond Tenor Z-sprd YTW 4.75% Jan-29 SLB 2.7y +97 3.78% 4.50% Jan-30 SLB 3.7y +101 3.84% 3.70% Sep-31 SLB 5.4y +127 4.12%

Slope Jan-30 → Sep-31 = ~15bp/y. Extending 0.3y to Jan-32 adds +4-5bp off the Sep-31 anchor. FV: MS+131/133 mid, MS+135 bid. EUR 5.7y MS interp ~2.95% (EUSA5 2.92 / EUSA6 2.96), implying yield FV ~4.27%.

OpCo cross-check

ADRIT (Baa2 senior) Jul-31 at +86 (5.3y), Jun-32 at +99 (6.1y). HoldCo/OpCo basis at the long end ~32-38bp → ATLIM 5.7y implied +128/132. Consistent with the direct curve build.

NIC ladder

Launch Yield NIC vs mid FV NIC vs bid FV MS+140 4.35% +7/9bp +5bp MS+135 4.30% +2/4bp flat MS+130 4.25% -1/+2bp -5bp MS+128 4.23% -3/-1bp -7bp

Switch vs ATLIM 3.70 Sep-31

Sep-31 trades +127 z-spread. New Jan-32 at +135 = 8bp pickup for 3-month extension. Curve slope on this part of the ATLIM stack runs ~13-15bp/y → fair extension worth ~4bp. Switch threshold: re-offer ≥ +138. Below that, hold Sep-31; above, rotate into the new line. At +130-132 (most likely print), no switch — the rotation costs ~3bp of carry for marginal duration extension.

SLB structure

KPI premium is a 75bp bullet at maturity, not coupon step. PV of full miss on 5.7y ≈ 13bp running. Probability-weighted give-up is already embedded in the existing SLB curve, so no incremental SLB discount needed in FV. KPI 3 (ADR LTO, 2024 baseline) is the tightest window of the three triggers — the only one with a baseline already partly elapsed.

3M par call standard, MWC standard, no FV impact. Ba1/BB+/BB+ keeps it HY index eligible — supports book depth at any benchmark size.

Bottom line

Re-offer Action ≥ MS+138 Buy + switch out of Sep-31 MS+135 Par work MS+130-132 Marginal — small clip, hold Sep-31 < MS+128 Pass

Most likely print +130-132 given XO/Main tone (295/60) and ATLIM's anchored Italian bid.

M N