Good morning! There are lots of comment-worthy news stories today.

To get us started, we have an updated comment from Paul Scott on Victoria (LON:VCP).

I'd also like to mention:

  • Crawshaw (LON:CRAW) - intention to appoint administrators
  • Fastjet (LON:FJET) - funding update
  • Next (LON:NXT) - trading update
  • Computacenter (LON:CCC) - Q3 2018 trading update


This section written by Paul Scott.

Victoria (LON:VCP)

  • Share price: 375p (-4%)
  • No. of shares: 125 million
  • Market cap: £470 million

Victoria (LON:VCP) has issued an update regarding its possible bond issue, here;

Credit rating and response to speculation

This carpet maker has given more details about its proposed bond issue, to replace the exiting bank borrowings. Summarising it, with my comments:

Credit rating - Fitch has given the rating BB(stable) for the intended bond issue. Using a table shown on Wikipedia, this doesn't look very good - it's in the bracket described as non-investment grade, and speculative. "Higher degree of default risk, speculative" are the description provided by Google for BB credit rating bonds. So not something to brag about, I would suggest. The interest rate would therefore tend to be higher than better quality bonds.

"Misleading rumour & speculation" - what does the company expect, if it drops a bombshell on the market, with no explanation? At the same time as issuing a profit warning, which is what happened here.

Banking relationships (with HSBC and Barclays) - Victoria says;

Firstly, the Company continues to have a close and positive relationship with its lending banks, HSBC and Barclays, and continues to operate with significant headroom with respect to its covenants under the existing 2-year facilities put in place in August 2018.

Our lending banks are acting as joint global coordinators and bookrunners on the potential Bond issue and have been working with us on the project since April of this year.

That's reassuring on the banking covenants.

What I don't understand is this. If the banks are happy with their existing lending to Victoria, then why have they been working with the company to get their lending repaid through a bond issue? That just doesn't make…

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