Desjardins: A clean sheet in 2025 ? (they think NO)
Chart of the week:
BBD opportunistically extends debt maturity profile at a low cost, as high-yield credit investor sentiment improves. BBD has successfully priced an offering of US$750m senior notes due July 2031 with a coupon of 7.250% sold at 99.75% of par (effective yield of 7.28%). Not only is this amount higher than the initially expected offering of US$500m—likely signalling that BBD saw betterthan-expected investor demand for its new bonds—the coupon is considerably better vs the US$750m 8.75% 2030 notes BBD issued in November (now trading at ~7.4% YTM).
This is not a surprise as the highyield debt market has been on a tear recently, while BBD’s leverage improved further in 4Q, crossing the key 4x level. The current 2025 FCF consensus of US$856m implies that BBD is trading at an FCF yield of 20.0%, above its bizjet peers (average of 5.8%) and the three-year historical average of 11.8%.
Even more impressive is that if BBD decides to go down the clean sheet route in 2025 (low probability, in our view), it would still have an FCF yield above its peers’ (9.3%; assuming a US$500m incremental capex increase).