The Intrum AB bond with a remaining maturity of 4 years is trading at approximately 84% of par on the secondary market. Thus, it surpasses its levels at the end of November, just before the short and brutal fall in which the loan fell to just below 78%.
At a current price of 83.64% of par, the Swedish group, which specializes in debt management and collection services, offers bondholders a yield of 7.25%, subject to a 3% coupon and due on September 15. 2027.
The minimum denomination is 100,000 euros.
Moody’s, Fitch and Italy
The decline in loans at the end of last year can be explained by the decisions of Moody’s and Fitch, as well as the write-down of Intrum AB’s stake in Italy. The company said that the impact of this operation will be felt in the accounts of the fourth quarter of 2022.
Intrum AB also faced a decision by Fitch Ratings to downgrade its rating outlook to ‘negative’ (specifically due to this impairment correction in Italy) even if the ‘BB’ rating of the bond under review was confirmed.
Moody’s, on the other hand, did not hesitate and announced on November 16 that the ratings were lowered by one level from the previous “Ba2” to “Ba3”, and the forecast was stable.
Thus, the bonds under review are now rated “Ba3” by Moody’s and “BB” in the “High yield” (speculative) category by Fitch, which explains the yield level.
Moody’s bases its decision on concerns about Intrum AB’s continued high debt since the implementation of its debt-financed growth strategy. And the agency expects that a worsening macroeconomic environment in Europe, rising funding costs (with rising interest rates, editor’s note) and intense competition among debt collectors will increase pressure on profitability. According to Moody’s, all this should have a negative impact on the Swedish group’s ability to sustainably restore its short-term financial ratios.
Who is Intrum AB?
Intrum AB was formed in 2017 from the merger of Intrum Justitia and Lindorff. A combination that allows you to create a real leader in debt collection and management companies. Available in 25 European countries (including Brazil). It has more than 10,000 employees and serves about 80,000 customers.
In 2021, Intrum AB achieved a turnover of SEK 17.9 billion (+/- EUR 1.6 billion), based on the latest annual data available.
The latest quarterly results can be accessed via this URL link.
The Stockholm Stock Exchange-listed company has a market capitalization of approximately SEK 16.4 billion (+/- EUR 1.45 billion).
Collection and payment of receivables
It should be remembered that debt collection consists of using all available legal means (peace, court, etc.) to pay the debtor’s outstanding debt to creditors.
However, the prospect of a legal recovery procedure (debt) may put off certain economic players for a number of reasons (costs, time, cash requirements, etc.).
Customers (especially banks) then have the option of assigning their receivables to Intrum AB. This is the other side of the Swedish group’s work: the recovery of receivables.
Repossession of receivables consists of transferring the portfolio of receivables to another party (in this case Intrum AB). In most cases, acquired receivables are then collected by the buyer themselves, with the latter then bearing the costs of collection, as well as the risk of default…