(Bloomberg) -- Bonds issued by French supermarket group Carrefour SA took a pounding on Wednesday as a takeover approach from Canada’s Alimentation Couche-Tard Inc. sparked concerns that a deal would swell the combined company’s debt burden.
A 1 billion euro ($1.2 billion) note maturing in 2027 was indicated 1.2 cents lower at 115.3 cents, marking the biggest one-day price drop since issuance last March, based on data compiled by Bloomberg. It’s the worst-performing bond in the euro high-grade market Wednesday, followed by other bonds issued by the French grocer.
Any takeover of Carrefour would likely require Couche-Tard to take on further debt to finance the transaction, potentially hurting the credit profile of the food-retailing behemoth that would emerge from it, analysts said.
“If Couche-Tard needs to raise cash to finance the transaction and then also needs to invest in Carrefour, it will take a while before the benefits of the transaction become visible,” said Alyssa Gammoudy, a credit analyst at ING Group NV.
A spokesperson for Carrefour didn’t immediately respond to a request for comment.
Credit rating firms have already taken issue with Carrefour over its debt load. Moody’s Investors Service kept the company’s Baa1 rating at a negative outlook last September, citing high gross leverage and low cash generation even as a transformation plan labeled ‘Carrefour 2022’ starts to yield results.
Asset Sales
As of June last year, Carrefour had net financial debt of 5.2 billion euros, a decline on the previous year as it sold off assets. The grocer has outstanding bonds in euros and dollars.
While the prospect of a credit-negative deal weighs on bond prices, not all bondholders are convinced the approach from the owner of the Circle K chain will result in a deal.
“We think the Couche-Tard approach for Carrefour is unlikely to go through,” said Tim Winstone, a portfolio manager at Janus Henderson Investors, who holds some of the French firm’s notes.
Últimas Noticias
Debanhi Escobar: they secured the motel where she was found lifeless in a cistern
Members of the Specialized Prosecutor's Office in Nuevo León secured the Nueva Castilla Motel as part of the investigations into the case
The oldest person in the world died at the age of 119
Kane Tanaka lived in Japan. She was born six months earlier than George Orwell, the same year that the Wright brothers first flew, and Marie Curie became the first woman to win a Nobel Prize
Macabre find in CDMX: they left a body bagged and tied in a taxi
The body was left in the back seats of the car. It was covered with black bags and tied with industrial tape
The eagles of America will face Manchester City in a duel of legends. Here are the details
The top Mexican football champion will play a match with Pep Guardiola's squad in the Lone Star Cup
Why is it good to bring dogs out to know the world when they are puppies
A so-called protection against the spread of diseases threatens the integral development of dogs
