Tuesday 19 September 2017 by FIIG Research Company updates

Company updates – CML Group, Ei Group PLC, Genworth, JC Penney, Moelis Australia, zipMoney

This week, CML Group convert notes to equity, Genworth Australia receives a Moody’s downgrade while Oceanwide has a first stage approval to acquire Genworth USA, new DirectBond from JC Penney and Enterprise Inns, Moelis to raise funds up to AUD95m via bond issue and zipMoney 2017-2 notes are performing within expectation

CML Group convertible notes to equity

CML Group Limited (CML) announced that it will be converting 10,387,131 of listed convertible notes (ASX:CGRG) to equity on 4 October 2017. This is seen as a positive development for CML, as it is materially increasing the net equity position of the company. Following the conversion, there will be 41,548,524 new shares issued.

Convertible note holders will receive four shares in CML for every one convertible note held. On the closing share price of AUD0.35 on 12 September 2017, this represents a (40%) premium for convertible note holders on the issue price of AUD1.00.

Enterprise Inns Group new DirectBond

We have added the GBP fixed rate secured notes issued by Enterprise Inns Group Plc (Ei Group) on 9 May 2000 to our DirectBond list. Interest on the notes is fixed at 6.875%.

Ei Group plc (formerly Enterprise Inns plc) is the largest pub company in the UK, with 4,283 properties as at 31 March 2017 that are predominantly run as leased and tenanted pubs. 

More information on Ei Group's 2025 bond is available in the Factsheet here.External link - opens in a new window

Genworth Australia is downgraded by Moody’s while S&P and Fitch affirm

On 13 September 2017, Moody’s downgraded its rating on Genworth Australia from A3/Negative to Baa1/Stable. Over the last week, both Fitch and S&P affirmed its ratings at A+/Stable and A+/Negative, respectively.

The Moody’s report notes, “The downgrade of Genworth Australia's rating reflects both the high and rising level of tail risks embedded in the Australian housing market and reduced demand for domestic lenders' mortgage insurance (LMI) products. In Moody's view, these factors outweigh positive developments at Genworth, which include a de-risking of its portfolio and stable regulatory capital.”

Our latest credit note on Genworth Australia is available here.External link - opens in a new window

Genworth USA

On 14 September 2017, the Virginia State Corporation Commission, Bureau of Insurance, approved the proposed acquisition of control by Oceanwide of Genworth’s Virginia domiciled insurance companies, Genworth Life and Annuity Insurance Company and Jamestown Life Insurance Company, as contemplated under the merger agreement entered into by Genworth and Oceanwide on 21 October 2016. Genworth USA is still pending approval from the Committee on Foreign Investment in the United States, which reviews the national security implications of foreign investments in US companies, as well as US, Chinese and international regulators.

A detailed outline of the transaction progress is available here.External link - opens in a new window

JC Penney new DirectBond

On 1 January 2017, JC Penney commenced interest payments on its 2023 senior unsecured notes which has been added to our DirectBond list. Interest on the notes is fixed and payable in cash at 5.875% per annum until the first call date.

More information on JC Penney’s 2023 bond is available in the Factsheet here.External link - opens in a new window

Moelis Australia to raise funds via non underwritten securities

Advisory and fund management firm Moelis Australia (Moelis) is looking to raise AUD59.7m via a non underwritten institutional placement of new securities priced at AUD5.00 each. 

Moelis also announced the launch of an unsecured bond issue to raise up to AUD35m. The first tranche of notes will have a fixed coupon rate of 5.25% and a term of three years. According to a term sheet sent to fund managers, the bond issue will provide the company with additional, non equity capital to facilitate growth.

zipMoney 2017 Trust Class B notes are performing within expectation

We have provided a report on zipMoney 2017 Trust Class B notes. Our expectation is for the transaction to continue performing well, on the back of a well diversified receivables pool as well as a strong servicer. 

A link to the full report is available here.External link - opens in a new window