Future PLC (LSE:FUTR) has issued its first bond, which analysts at Panmure Liberum said will reduce future earnings slightly but this could be offset by more share buybacks.
The analysts also suggested the move highlights the "extremely cheap" valuation that the shares are trading at, noting a sub-6x P/E multiple.
The FTSE 250-listed publisher entered the bond market by issuing a £300 million five-year unsecured note, alongside a new £300 million revolving credit facility. The facilities replace existing arrangements totalling £650 million.
The bond carries a 6.75% coupon and has been rated BB+ by S&P and Ba2 by Moody’s. The revolving credit facility runs for four years, with two optional one-year extensions and a 2.0% margin.
Analysts at Panmure said the new financing structure would not impact FY25 earnings per share but would reduce FY26 and FY27 EPS by 3.3% and 7.1% respectively due to a higher gross debt balance. But the broker expects the company could announce further share buybacks, which would boost earnings accretion.
The new credit arrangements come ahead of a third-quarter trading update expected on 17 July, where the broker said it will be looking for confirmation that the recovery in US advertising continues.
Panmure Gordon rates the stock as a ‘buy’, with a target price of 1,797p based on a valuation of 10x earnings.