Initiation on Punch Pubs

All,

Please find the “Initiation" of Punch Pubs here.

We are contemplating the roll-out of a wider set of new names for you. The idea is to have an overview on - say 100 names in total, which would then allow us to add deeper research more flexibly on each of these names as and when appropriate. To make this feasible, we are thinking of starting with a 1-Day effort on a bigger range of names and subsequently dig more deeply into those that look interesting.

We have been experimenting with such a 1-Day format on Punch and Oriflame, which you will find under a separate heading “Initiation" below our coverage on the website. Please let us know your thoughts on this format - if you like it, find it useless or have ideas for us.
Thank you!

Initiation on Punch Pubs

At 10-11% YTM, Punch bonds reflect the general yield premium we require from sterling paper, but on first sight appear wide for 70% LTV paper (pre-inflation valuation) that’s secured over a yielding portfolio of Britain’s most popular real estate. The deal has been sold at the top of the market and on a litany of add-backs that have yet to be achieved. Also, at second glance, the documentation is not what we are used to from WBS. The game then will be to trade some LTV for investments to grow cashflow in an environment where there is less cash going round and while it’s fair to use LTV, the V is changing and there is ample scope to get layered.

Wolfgang

E: wfelix@sarria.co.uk
T: +44 203 744 7003
www.sarria.co.uk