Recommendation
We recommend that investors do not purchase this bond at this time. Our recommendation is underpinned by the company’s deteriorating earnings, consistently negative operating cash flow and net interest income generation we believe to be questionable. The main positive for the credit is its industry positioning, specifically the company’s exposure to less risky sectors as indicated by S&P. Nonetheless, the macroenvironment remains fickle because of the pandemic and can deteriorate further which may create additional headwinds for loan portfolio growth and consequently, interest income growth. On balance, we believe the risk in owning this bond is too elevated to recommend.
| Sector: | Financial Services |
| Bond Name | CREAL 9.50% 2026 |
| Credit Rating/Outlook (S&P) | BB/Stable |
| Maturity | February 07, 2026 |
| Issue Size | US$400Mn |
| Rank | Senior Unsecured |
| Current Price (January 12, 2021) | US$107.87 / US$107.88 (Bid/Ask) |
| Yield to Maturity | 7.59% / 7.36% (Bid/Ask) |
| Yield to Worst | 7.24% |
| Call Option (worst call date) | February 7, 2025 |
| Recommendation | Underweight |
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