Fixed Income Research

Context and Scope:

The Smart Cube assisted the client in preparing a detailed credit swap report for two European telecom companies.

TSC Approach:

The Smart Cube created a detailed model with forecasts for both the companies. The model compared the yields, credit metrics (with the help of ratios such as net debt/equity, interest coverage, EBITDA/net debt etc), cash position (by predicting the future cash outflows and inflows) and profitability (by analyzing the top line growth opportunities and EBITDA profitability) of the companies and gave recommendations on the swap of holdings of the company that had the worst metrics along with lower yields.

Deliverable:

The study was completed within 5 days and the output was a comparative credit profile with a detailed analysis for each company. The model analyzed the two companies on the basis of profitability, growth opportunities, liquidity position, gearing and yields and provided recommendations