Intrum | Positioning 📕 - comment

This morning it's shoot first and ask questions later. We seemed to be the only ones disappointed with the company’s results. Collections have been coming down, churn has had to increase and the services margin is not improving. The lower availability of the RCF and management’s unconvincing math surrounding the growth of the services arm did little to improve our perception. Now S&P have downgraded the issuer to BB- outlook stable and we are should have, would have, could have…. We see not catalyst in the foreseeable future that would drive the equity price and the long end of the bonds, while still not value protected if the company keeps chipping away at the front end, would be value protected if management chose to restructure before 2025 maturities. We are putting on a short in the equity of 2%, possibly taking a bit of a short-term bounce on the chin in the next days and are going long the ‘28s at 69.25 today. We will be updating our analysis shortly.