EM CEEMEA CREDIT: LIMYEN: New issue deal USD450mnWNG 5.5NC2 green
Limak Renewables (LIMYEN; B2/-/-)
New issue deal: USD450mnWNG 5.5NC2 green
IPT: 10% area
FV: 9.75%
- We expect to see FV @ 9.75% yield or z+575bp (see chart below). That gives a small 5bp extension pick up vs our anchor point, distribution provider GDZELE 29s. We take into account the WNG indication, thus expecting the FV estimate for the deal to sit well inside benchmarks ZOREN 30s and VESTL 29s.
- When looking for comparables, we focus our attention on recent vintages issued by peers, ie ZOREN (B3pos/-/B+), VESTL (B3/-/B+) and GDZELE (B2/-/BB-). In particular, lower rated ZOREN 11 Apr30 charts @ z+630bp or 10.30% yield (launched @ 11% back in Oct ’24), one notch lower rated VESTL 9.75 May29 charts @ z+583bp or 9.83% (launched @ 9.875% back in May ’24) and similarly rated and sub-bench GDZELE 9 Oct29 charts @ z+570bp or 9.70% yield (launched @ 9.25% back in Oct ’24). We expect to see on-going demand for this type of corporate risk and we view the stance on Turkish risk as supportive for credit. For reference, we also chart LIMAK 9.75 29 @ z+561bp, issued out of Limak Cimento Sanayi (building materials business).
- Peer ZOREN operates a growing renewables business in a vertically integrated utility generation (991MW installed capacity) and distribution model in Türkiye, as part of well diversified Zorlu Holding group. Ratings are supported by stable cash flows stemming from regulated business as well as expectations for improving leverage trajectory.
- Peer GDZELE, 100% owned by privately held Aydem Holding, operates as an electricity distribution provider. Its metrics benefits from the highly regulated business it operates in, supported by improvements of the inflationary stance with exposure to political and macro risks, which can trickle through in terms of speed of tariff adjustments and inflation impacting on operations. The impact from FX trends also remains a risk factor, with local Lira denominated revenue flows covering dollar denominated debt.
- Limak Renewable Energy is a energy producer with total installed capacity of 985MW, with 852MW hydroelectric power plants, 119MW solar plants and a14 MW geothermal plant, which in total make up less than 1% of market share in Turkey.
- Concentration is high with the two hydro plants accounting for 75% of generation and 90% of EBITDA. Co. cash flows are 50% linked to USD via feed-in-tariffs with 5.5years remaining. Co. has high capex plans (USD600mn) as it looks to increase capacity, leading to negative FCF of around $200mm between 2024-28.
- FFO to net interest of 2.4x in FY24. Co. has an internal leverage target of net debt to EBITDA of target of 3x but is expected to range between 2.5-3x over the next two years.
- Besides macro developments, volumes, Feed in tariffs (to be maintained), capex (inline with guidance) and no dividend payments are key for credit ratios and for the Co.’s credit.
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COMMODITIES: Gains for WTI Futures Expose Key Short-Term Resistance at $76.41
WTI futures traded higher last week as the contract extended recent gains. A stronger reversal to the upside has exposed key short-term resistance at $76.41, the Oct 8 high. A firm resistance at $71.97, the Nov 7 high, has been breached, strengthening a bullish theme. On the downside, a reversal lower would expose support at the 20-day EMA, at $70.49. This average is seen as a key short-term support. A bear threat in Gold remains present despite the latest recovery, The yellow metal traded sharply lower on Dec 18 and the move undermines a recent bull theme. A resumption of weakness would open key support at $2536.9, the Nov 14 low. The first firm support to watch is $2583.6, the Dec 19 low. On the upside, a resumption of gains would instead signal scope for a climb towards resistance at $2726.2, the Dec 12 high.
- WTI Crude down $0.14 or -0.19% at $73.83
- Natural Gas up $0.29 or +8.5% at $3.637
- Gold spot down $8.18 or -0.31% at $2631.91
- Copper up $1.45 or +0.36% at $409.1
- Silver up $0.13 or +0.44% at $29.7411
- Platinum up $9.26 or +0.99% at $948.25
EQUITIES: Bear Threat in E-Mini S&P Remains Present, Attention on $5866.00
A bull cycle in the Eurostoxx 50 futures contract remains intact. However, the recent move down continues to highlight a corrective phase and despite the latest bounce, a short-term bear threat remains present - for now. Key short-term support has been defined at 4829.00, the Dec 20 low. A break of it would confirm a resumption of the bear cycle and open 4800.87, a Fibonacci retracement. Initial firm resistance to watch is at 4942.00, the Jan 2 high. A bear threat in the S&P E-Minis contract remains present. The reversal lower from the Dec 26 high, highlights the end of the recent Dec 20 - 26 corrective bounce. Attention is on 5866.00, the Dec 20 low and a key short-term support. Clearance of this level would strengthen a bearish theme. Initial firm resistance to monitor is 6107.50, the Dec 26 high. Clearance of this level is required to open key resistance at 6178.75, the Dec 6 high.
- Japan's NIKKEI closed lower by 587.49 pts or -1.47% at 39307.05 and the TOPIX ended 28.54 pts lower or -1.02% at 2756.38.
- Elsewhere, in China the SHANGHAI closed lower by 4.507 pts or -0.14% at 3206.923 and the HANG SENG ended 71.98 pts lower or -0.36% at 19688.29.
- Across Europe, Germany's DAX trades higher by 81.84 pts or +0.41% at 19989.21, FTSE 100 lower by 11.2 pts or -0.14% at 8212.75, CAC 40 up 47.39 pts or +0.65% at 7329.61 and Euro Stoxx 50 up 40.2 pts or +0.83% at 4911.65.
- Dow Jones mini up 44 pts or +0.1% at 43067, S&P 500 mini up 21.5 pts or +0.36% at 6011, NASDAQ mini up 119.5 pts or +0.56% at 21636.
FOREX: FX OPTION EXPIRY
Of note:
EURUSD 1.65bn at 1.0300.
EURGBP 1.29bn at 0.8300 (wed).
USDJPY 1.45bn at 157.50 (wed).
EURUSD 1.1bn at 1.0350 (thu).
- EURUSD: 1.0300 (1.65bn), 1.0320 (391mln), 1.0350 (726mln), 1.0380 (961mln), 1.0400 (516mln).
- GBPUSD: 1.2500 (555mln).
- USDCAD: 1.4420 (562mln).
- USDCNY: 7.3500 (848mln).
