Tui - as expected, KfW comes in with further support

All,

Hard to base analysis on the likelihood of further government support, but TUI bondholders have lucked out with an additional €1.2bn of liquidity, €1.05bn provided by means an increase in existing RCF by KfW and the remaining €150m by issuance of a convertible bond with 9.5% coupon, to be owned by the Economic Stabilisation Fund (WSF).  Combined with existing liquidity, this gives TUI €2.4bn of liquidity as they face into the seasonal swings through Winter 2020/21.  We are surprised by the size of the facility and were expecting the requirement in the region of €700-800m.  Although we thought a further KfW facility was more likely than not, we did not take an active position in the bonds.  This news will provide significant support to the Oct-21s.  Bonds were 76-8 prior to the announcement.  Covenant testing resumes in September 2021, prior to maturity of the high yield bonds, but given their relative size to the overall structure we would expect them to be paid on maturity.  The Company is announcing Q3 results tomorrow. 

 Happy to discuss further.

Tomas