Analyst: Punch move may have been misunderstood
A move by Punch Taverns, the embattled pub group, to repay a tranch of debt to some of its bondholders “may have been misunderstood” by the stock market, according to a City analyst.
Hickman: buyback of bonds is quite limited
Punch shares jumped 30% after it announced the plan to repay £90m of debt held within one of Punch’s securitisations, known as ‘Punch A’.
But KBC Peel Hunt analyst Paul Hickman described the move as a “sensible, if limited, measure to utilise resources outside the securitisation to protect the assets inside the securitisation”.
He added: “However, it makes no difference to Punch’s overall debt position, which we regard as somewhat risky, and which requires a wider solution. We do not change our target price of 127p.
“The proposed buyback of class A3(N) is quite limited, being £93m out of total debt of £4.6bn. The scale and significance of the proposal seems to have been misunderstood by the market initially.
"This appears to be a move to use resources outside the securitisation to protect Punch A against possible breaches, which was foreshadowed in the company’s July presentation."
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