Maxeda Takes Chance to Refinance Debt After Earnings Impress
2020-09-14 17:07:01.780 GMT

By Irene García Pérez
(Bloomberg) — Maxeda DIY Group BV, a Dutch operator of DIY
stores, is seizing on momentum from a strong set of earnings
last week to refinance its debt.
The company offered 400 million euro ($475 million) of
senior secured notes on Monday, according to a person familiar
with the matter who asked not to be named because the
information is private. The proceeds will go toward refinancing
its 435 million euros of outstanding bonds due in July 2022.
Maxeda posted a “bombastic” second quarter that saw a 92%
surge in adjusted Ebitda and revenue up 29% on a like-for-like
basis, potentially creating conditions for an early refinancing,
CreditSights analyst Neill Keaney wrote in a note to clients
dated Sept. 9. The firm’s strong top-line momentum and improved
liquidity was a “game changer,” Barclays Plc credit analysts
said in a note to clients.
A spokeswoman for Maxeda declined to comment when contacted
by phone.
The Amsterdam-based firm joins other issuers seeking to
refinance their debt as stimulus from central banks and
governments helps stoke investors’ appetite for risk. French
cable operator Altice France SA is raising junk bonds worth just
over $1 billion from investors in Europe and the U.S. in a bid
to trim borrowing costs, people familiar with the matter said
Moody’s Investors Service cut Maxeda’s rating two notches
to Caa1, or seven steps below investment grade, on March 30
citing liquidity concerns. S&P cut the rating one notch to a
similar level the next day, saying it expected the Covid-19
pandemic to hit operating performance and liquidity, making a
potential debt refinancing more difficult.
Read More: Altice France Plans to Cut Interest Costs with
$1B Junk Bond
While refinancing the 2022 bonds will help Maxeda to extend
its maturities, the firm’s sustained strong performance may give
rating agencies other reasons to upgrade its debt, according to
Maxime Guionie, a credit analyst at Spread Research based in
Lyon, France.
“The rating agencies failed to take into account the recent
good performance which proved to be more than just temporary,”
said Guionie in emailed comments. “We stopped seeing these bonds
as CCC after the company released their first quarter results.”