High Yield Bonds Daily

Research evidence excerpt

High Yield Bonds Daily

last reporting, and is now indicated around +1600-1700bp. We still find

this attractive, but price appreciation from here likely more limited until the

financial performance improves and the leverage level stabilises at a lower

level.

SSG: Q1, weaker than anticipated

SSG reported pro forma LTM revenue of NOK 3,680m, coming in 4%

below ABGSCe. Pro forma LTM adj. EBITDA was NOK 1085m, 2% below

ABGSCe and broadly flat compared to FY25. Q1 pro forma revenue was

NOK 880m, representing +2% y-o-y, and -13% vs. ABGSCe. Pro forma

adj. EBITDA for the quarter came in at NOK 238m, -1% y-o-y vs. -17%

vs. ABGSCe. According to management, the weak quarter was partly

driven by some of the larger IT and managed service providers in the

portfolio experiencing softer sales. Management did not communicate the

underlying reasons for this, and we will seek further clarification during the

webcast today. However, performance is expected to improve from Q2 and

onwards. In addition, the company was negatively impacted by material

FX effects, given that reporting is done in NOK. The report also highlights

that the completed acquisition of Cloud Nomads in April represents the

final expected acquisition ahead of the refinancing process, with focus

now shifting towards deleveraging, in line with previous communication.

Notably, the messaging around deleveraging now appears more explicit

and definitive than in earlier communications. Operating cash flow came in

at NOK 57.6m versus ABGSCe at NOK 137m, due to roughly double the

anticipated interest expenses. We observed similar deviation in interest

last quarter, which was due to pre-payments of interest, which might

be the reason this quarter as well, in combination with more interest on

the drawn RCF of NOK 350m.