Thomas Cook up 45%, bonds fall

Business Day - - FRONT PAGE - He­len Reid and Sarah Young Lon­don

Thomas Cook’s shares climbed 45% on hopes that it would not need to is­sue new eq­uity, although its bond prices ex­tended their losses to record lows on Wed­nes­day.

Thomas Cook’s shares climbed 45% on hopes that it would not need to is­sue new eq­uity, although its bond prices ex­tended their losses to record lows on Wed­nes­day, amid deep­en­ing wor­ries about the UK travel group’s debt.

The hol­i­day and air­line group has been un­der pres­sure since late Novem­ber when it cut its profit guid­ance and sus­pended its div­i­dend, halv­ing the value of its shares in just over a week. It was burned by the hot sum­mer in north­ern Europe, which re­duced de­mand for travel to south­ern Eu­ro­pean re­sorts.

The stock re­cov­ered some losses on Wed­nes­day morn­ing to trade at 32.7p, which at mid­day was up 45% from the sixyear low hit on Tues­day.

Some traders said that fears that Thomas Cook would need to carry out a fundrais­ing had re­ceded, boost­ing the stock, although oth­ers dis­agreed, call­ing Wed­nes­day’s rise a “dead cat bounce, most prob­a­bly”.

Jefferies an­a­lysts said in a note on Wed­nes­day that they did not ex­pect Thomas Cook to need new eq­uity.

“Although we ac­knowl­edge the risk, our cen­tral the­sis is that Thomas Cook can avoid a cap­i­tal raise,” said Jefferies an­a­lyst Re­becca Lane.

But Thomas Cook’s bonds hit a record low af­ter credit rat­ing agency Moody’s cut its rat­ing on the com­pany’s debt to B2 from B1.

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