I agree with Rupesh, who I respect a lot as an analyst.

Next time around the subs will get equitized. A full repayment as suggested in the failed proposal is dreamland folks.

THREAD

1/ https://twitter.com/Everest_UK/status/1294285757251715074

Lets get one thing clear: We are currently not involved as my PM poos in his pants. It is also more difficult as I work from the US and on dif sits.

Anyways, the asymmetry of the sit is mind boggling atm. 1Y Front End CDS: c100pts upside (sub recovers 0%), c-5pts downside.

2/

What Rupesh has not mentioned in his note is that there is very little to no cross ownership b/w senior and sub, ie this takes away the dynamic of self bail-out, ie that seniors have an incentive to roll in order to bail-out their own sub position.

3/

Rupesh's argument would get even stronger if one considers the following: I have heard from several sources now that the refi deal has gone that south that banks needed to sniff around hardcore bears in order to get new money/lenders into the deal.

4/

Without success!

This is almost a death sentence for this deal, as it is inherently dependent on new money/new lenders IMHO.

Why? Whilst some existing lenders would probably agree to a refi (albeit coupon is big question mark with suggested NPV cuts super aggressive)...

5/

...the huge majority of them want to cut their exposure drastically. Hence the need for new lenders. Again something I have heard not only from one source.

Everyone that would ever consider Lowell as a long is already in the structure folks!

END

PS: Neither higher coupon is possible, nor repayment of SUN with anything else. Esp not at close to par lvls.

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