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Investing.com -- Bank of America has initiated coverage on luxury retail group Kering (EPA:PRTP) with a cautious stance, recommending Buy Protection on 5-year CDS and Underweight €31-36s bonds.
While concerns about Holdco debt continue to dominate discussions around the company, BofA analysts believe that parent company Artemis’ financial situation remains manageable. They note that fears of negative spillover to Kering from Artemis have not yet materialized as some investors had anticipated.
Despite this assessment, BofA expects continued spread pressure at Kering in the near to mid-term. This pressure is attributed to several factors including limited signs of operational turnaround and a precarious credit rating.
The bank’s analysis takes into account €2 billion in yet-to-be-completed disposals by Kering. Additionally, the luxury group faces a €4 billion Valentino liabilities overhang that factors into BofA’s cautious outlook on the company’s credit position.
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