May 8 (Bloomberg) -- The yield on Vestas Wind Systems A/S’ 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.
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