Debenhams road to financial restructuring | Calamatta Cuschieri

The article gives an overview of the market on Monday. It also explores Debenhams’ financial restructuring after its new credit line as well as Iron ore’s futures decline

An image of a Debenhams store
An image of a Debenhams store

European markets closed higher on Monday with the FTSE 100, the DAX and the CAC40 closing 0.82%, 0.99% and 1.06% higher. Italian lenders were among the gainers as reports showed that their capital position levels are better than those required by the ECB. According to figures published on Monday, the UK economy grew at its slowest pace since 2012 during 2018. GDP growth for the fourth quarter came in at 0.2% from 0.6% in the previous quarter. Deutsche Post rose 2% following reports that Germany could be handing the postal firm an increase in letter postage from next summer while Smith & Nephew fell by 3% after reports emerged that they were in talks to acquire NuVaisive.

Markets in the US were mixed as investors are waiting for more news about the US – China trade deal. A meeting between Treasury Secretary Steve Mnuchin and the Chinese Vice premier has been scheduled. The S&P 500 closed marginally higher with a gain of 0.07% while the Dow Jones closed down 0.21%. Arconic and Norfolk Southern were among the largest gainers as Arconic announced a spinoff of one of its businesses while Norfolk Southern announced a strategic plan that would increase future dividends.

The Maltese market started the week in the green as the MSE Equity index was up 0.281% at 8,936.76. Mapfre Middlesea plc was the largest gainer as it was up 2.56%. International Hotel Investments plc followed suit up 2.46%. The only other gainer was Malta International Airport plc gaining 0.78%. There were two losers for the day namely Bank of Valletta plc and Malita Investments plc down 0.78% and 1.10% respectively.

Debenhams credit deal

Debenhams has been in financial trouble for some time with high debts on its balance sheet and struggling to maintain sales due to the U.K.’s decline in traditional retailers. The retailer was also struck by internal fighting as Mike Ashley, a billionaire who has a stake in the company, called for a shareholders’ vote to oust Chairman Ian Cheshire.

However the tide might be turning for the clothing retailer as it has secured $51.5 million in credit as it attempts to restructure its finances. The credit facility will cost the company Libor + 5% paid on an annual basis and is secured over the assets of the existing guarantors of its revolving credit facility and notes.

Trouble for iron ore futures in Singapore

Iron ore futures in Singapore fell as investors weigh a likely decline of the steel-making ingredient in China. Futures prices fell significantly in Singapore 4.7% to $84 a ton. The fall comes after prices were above $90 last week signalling a 20% increase over the past two weeks.

Richard Lu said to Bloomberg “If there are no more additional closures or planned closures in Brazil, then there may be some kind of price correction. Some mills are already at break-even and steel demand is still weak. So, if steel prices retreat to pre-holiday levels, the mills will be reluctant to buy raw materials in the near term.”

Barclays plc analyst Ian Littlewood stated that his outlook for 2019 is as low at $65 per ton signifying a decrease of over 20% from current prices.

Disclaimer: This article was issued by Aaron Saliba, junior trader at Calamatta Cuschieri. For more information visit, The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.