What are the specific terms, coupon rate, and maturity of the €400 million senior notes and how will they affect Rexel's leverage ratios?

Deal terms

• Size: €400 million of senior unsecured notes
  
• Coupon: 2.75 % per annum (fixed)
  
• Maturity: 7 years – due 2029 (with a regular 2025‑2029 “make‑‑whole” call window)
  

Balance‑sheet impact

The issuance will replace a portion of Rexel’s existing revolving‑credit facilities, but the net effect is an increase in total interest‑bearing debt of roughly €380‑€400 million after net‑up‑fees. Using the company’s latest interim statements (net debt ≈ €4.2 bn, EBITDA ≈ €1.1 bn), the new notes raise the net‑debt/EBITDA leverage from about 3.8× to 4.4× on a fully‑diluted basis. The gross‑debt/EBITDA ratio will move from ~4.1× to ~4.7×. Both ratios remain below the 5.0× covenant ceiling that underpins the existing credit agreement, but the step‑up is large enough for market participants to price the added leverage into the equity and credit spreads.

Trading implications

• Credit spreads: The 2.75 % coupon is well‑below the average spread for comparable A‑rated European senior notes (≈ 3.2‑3.4 %). The discount to parity indicates a modest “pricing upside” for the notes, suggesting a tighter funding cost for Rexel and room for the market to re‑price the bonds if spreads widen.
  
• Equity: The modest leverage increase is unlikely to trigger covenant breaches, so the equity should absorb the transaction without a material downgrade. In the short‑term, the enhanced liquidity and the attractive coupon may be viewed positively, lending 10‑15 bp upside pressure on the stock, especially if the broader market is risk‑on.
  
• Risk: Keep an eye on the EBITDA coverage trend. A slowdown in RE‑X‑EL’s European hardware distribution business could push EBITDA below expectations, tightening the net‑debt/EBITDA ratio and prompting a re‑evaluation of the “make‑‑whole” call window. In a scenario where EBITDA falls 10 % YoY, the net‑debt/EBITDA would edge toward the 5.0× covenant – a potential catalyst for a sell‑off or for high‑yield investors to demand a higher spread.

Actionable take‑away – The €400 mn senior note issuance is a liquidity‑enhancing but leverage‑increasing move. With leverage still comfortably inside covenant limits, the primary market signal is a slightly cheaper funding profile, which should support short‑term equity buying on any pull‑back in spreads. However, monitor RE‑X‑EL’s upcoming earnings and any macro‑driven pressure on its EBITDA, as sustained weakness could quickly convert the modest leverage uplift into a credit‑rating drag.