Recommendation
While the credit has seen some spread compression, we believe that there might be more to come. This comes as it trades slightly cheap relative to peers with the major concern as it relates to macroeconomic exposure to Caribbean government debt likely to be offset with the Ivari transaction. In this regard, the successful closure of the acquisition means that there may be slightly more spread compression ahead. In addition to this, approaching closer to the tail-end of the Fed hiking cycle might also limit the potential downside tailwinds on price from an even more restrictive monetary policy. In this regard, we opt to maintain our OVERWEIGHT rating on the credit and believe investors can continue to find comfort in SFC’s growing operations in an investment- grade country, having a strong brand and presence in a growing industry, strong capital adequacy ratios that stood the test of the downturn in FY2020 caused by the pandemic, as well as their credit rating and access to the capital markets.
| Industry: | Diversified Financials |
|---|---|
| Bond Name | SFCCN 5.30% 2028 |
|
Credit Rating (Fitch) Credit Rating (S&P) |
BB- BB+ |
| Maturity | May 13, 2028 |
| Issue Size | US$550 Mn |
| Rank | Senior Unsecured |
| Price (Source: Bloomberg) | 95.37 |
| Yield to Worst | 6.442% |
| Recommendation | Overweight |
Sagicor Financial Company Limited | Fixed Income Analysis
