French retailer Casino Guichard’s dollar bonds fell by over 1 point after the company said it raised €350mn ($347mn) via a bridge loan from US hedge fund Farallon Capital, as analysts noted that it may have risked breaching its Q3 debt covenants without it. This comes following approvals to complete the sale of its GreenYellow SAS unit. The loan may be used immediately to buyback some of its bonds. Bryan Garnier analyst Clement Genelot wrote, “Such pre-financing agreement is clearly not common… tends to prove that Casino was on the edge of covenant breach for 3Q 2022. The recurring covenant issue will come back as soon as in 1Q 2023 and 3Q 2023”. Casino Guichard is rated B3/B (Moody’s/S&P) and has been under the radar due to its high debt levels with net debt at €5.9bn ($5.8bn) as of end-2021, up 26% YoY and its group liquidity position at €2.7bn ($2.7bn). This has been seen in its share price falling by over 52% YTD and its fixed-tenor bonds falling over 30% during the year. Its covenants as of March 2022 focus on:

  • Ratio of secured gross debt to EBITDA (after lease payments) of 2.71x (vs. limit of 3.5x), representing headroom of €611m in secured gross debt
  • Ratio of EBITDA (after lease payments) to net finance costs of 3.41x (vs. requirement of 2.5x), representing headroom of €208m in EBITDA

Casino Guichard’s EUR 3.022% Perp was down 1.1 points to 22.375, yielding 13.28%.

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