Vallourec - comment

Vallourec reported strong numbers this morning backing up the 10% YTD increase in their share price this year. They have beaten our estimates for FY22 and with consensus EBITDA for FY23 at €1bn leverage will continue to come down over the coming year. The bonds are relatively expensive at 8.5% coupon, and the bonds, at BB-, should expect an upgrade in the near term. Question for Vallourec management is whether to call the bonds in June (at par) or wait until investment grade is achieved before refinancing. In the meantime, credit investors can enjoy the carry.