TAPTRA 5.625 12/02/2024

Transportes Aéreos Portugueses

Credit, Industrial/Transportation


Publicly traded companies mentioned herein: 

Highlights

The presenter is long the 5.625% December 2024 bonds of Transportes Aéreos Portugueses (TAP), the state-owned Portuguese airline. TAP’s capital structure consists of this €375MM issuance trading at 91.5 with a 10.4% YTM, a €200MM bond maturing in June 2023, €120MM of privately issued debt, and €2.8B of capitalized leases. He expects TAP will have €1.8B of cash on its balance sheet at the end of this year and generate just over €700MM of EBITDAR next year. This is a short-term trade predicated on debt paydown driven by previously approved state aid that TAP will receive. Based on the improved liquidity position, the presenter expects a large portion of the 2024 bonds to be taken out by mid-2023, which would represent a 15% – 16% 1-year total return from current levels in Euro terms. Additionally, he sees an opportunity to hedge that into dollars, allowing investors to pick up an additional ~300bps on the currency, creating a dollar-denominated return close to 20%.

  • Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.

  • Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.

Request access to DeMatteo Research for full access

Request Access

Already have an account?

Idea Discussion

Commentor 1 - 2 weeks ago

Signing up and creating account with us, unlocks this content for you. Contact us today for full access to DeMatteo Research and more.

Commentor 1 - 2 weeks ago

Signing up and creating account with us, unlocks this content for you. Contact us today for full access to DeMatteo Research and more.

Idea Discussions display submitted commentary from our investor community.

To read and participate in the discussion with the presenter and investor base, request access to DeMatteo

Request Access

Already have an account?

An error occurred loading this content. Try again later or contact us.