Nidda/Stada - comment
Moody’s downgrade of Nidda’s bonds reveals a potential wrinkle to maturity management operations. However, from the issuer's perspective, shifting maturities is about protecting the equity rather than worrying unduly about the debt rating. The loss of part of the loss-absorbing debt layer with SSNs would reduce any recovery for the SSNs in any potential restructuring.
The decision to downgrade now (as opposed to when the tender is complete) suggests that Moody’s has a strong steer that the company is targeting the SUNs with this latest issue.
The SSNs were downgraded from B2 to B3 (the SUNs were affirmed at Caa2). A reaction to the potential replacement of loss-absorbing SUNs with new SSNs. Moodys assumes that Nidda will tender EUR250m of the SUNs, despite the sub-90 tender price. We are less convinced.