Vestas Bond Yield Falls as Cash Flow Improves: Copenhagen Mover

The yield on Vestas Wind Systems A/S (VWS)’ 2015 bond fell to the lowest level in 15 months in Copenhagen trading as investors scaled back bets the Danish wind turbine maker will default after first-quarter cash flow improved.

The yield on Vestas’ 600 million-euro ($785 million) 4.625 percent bond dropped to as low as 8.37 percent, the lowest since February 2012. The bond yielded 8.38 percent at 9:58 a.m. local time compared with yesterday’s close of 9 percent.

Vestas is cutting costs and eliminating jobs to return to profitability after losing money as increased competition depressed prices across the industry. The Aarhus, Denmark-based company said today its first-quarter cash loss improved by 235 million euros to a 60 million-euro loss. That beat an average estimate for a loss of 184 million euros in a Bloomberg survey of five analysts.

“Free cash flow was better than consensus expectations, which bodes well for full-year cash flow performance,” Patrik Setterberg, a Copenhagen-based analyst at Nordea Bank AB, said in a note today. “The turnaround process seems to be on track.”

Vestas’ Bloomberg default risk rating, a measure based on the company’s reported earnings, operating performance and market information, has dropped to 0.01 percent, compared with more than 2.5 percent in November.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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