Takko - OK, you drive!
All,
Giving the company a covenant holiday now - ahead of lockdown 2 - amounts to saying to the bonds: "OK, you drive!” And reduces any risk of the (super) sr. facilities running away with the company before it's really running out of cash.
While anticipated, the 1-year covenant holday it is nonetheless good news for the bonds. The senior facilities (RCF and LCs) are ranking super sr. and in times of distress tend to come into focus - hence the low downside protection of the bonds earlier this year.
As ever, note that due to the somewhat unique LC arrangement, the company is not at risk of losing credit insurance on payables like so many other retailers are.
Wolfgang
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E: wfelix@sarria.co.uk
T: +44 203 744 7003