Getlink, an interesting Green Bond

SECTOR :

The transportation sector was severely impacted during the COVID19 crisis due to travel restrictions, and declining economic activity. In addition, at the regional level (UK-Europe), the conclusions of the Brexit talks will significantly influence trade and transport in terms of goods and people. Despite everything, the UK remains within reach of Europe and remains a major economic partner, as well as a preferred tourist destination.

GETLINK :

Formerly "Eurotunnel Group", Getlink is a European company transporting people and goods between the United Kingdom and Europe thanks to its infrastructure running under the channel (Trains and Roads).

POINTS : 


> Pros : Despite the difficult context of COVID19 weighing heavily on the transport sector, the company has managed to generate cash and positive cash flows. Getlink has also been able to control its budget to stabilize costs. While passenger transport has fallen, Freight has risen to + 2% in the current context (Brexit, COVID19), which is a sign of a certain stability and continued activity in this segment. Creditors recently showed their confidence in management by accepting an agreement allowing the lifting of certain covenants.

> Cons : The current climate still remains unfavorable for transport from a general point of view, overall traffic has fallen with, for example, -57% for rail at the level of Getlink's activities. Finally, despite a fairly "stable" situation compared to the sector, Getlink recorded a decrease in turnover of 17% (YoY) due to the current economic situation.

VIEW :

We view favourably the issue of the new EUR 700M Green Bond due in 2025 with a coupon of 3.5%. This decision is based on the strong trend for Green Bonds and the European stimulus which is based quite consistently on green investments. In addition, Getlink's fundamentals, although impacted by Brexit and COVID19, remain quite strong. Finally, Getlink is in a strong position in Freight and Transport between continental Europe and the United Kingdom.