Manutencoop's Bonds Jump as Financing Agreement Eases Pressures

Notes of Manutencoop Facility Management SpA, the Italian cleaning contractor at the center of a competition probe, climbed the most since issuance in 2013 following the signing of a new financing agreement.

The company got a deal worth as much as 100 million euros ($109 million) a year with Banca Farmafactoring, according to a Feb. 26 statement sent to noteholders and seen by Bloomberg News. The three-year pact covers public health-care receivables. The contractor’s 345 million euros of August 2020 bonds rose 6 cents on the euro to 62 cents, the highest in more than a week.

The new facility provides some breathing room for Manutencoop as it faces the risk of losing contracts with Telecom Italia SpA and an Italian government agency following a competition probe and the indictment of its chief executive officer in September. The potential loss of business has fueled an about 20 percent slump in Manutencoop’s bonds this year, among the worst performances in a Bank of America Merrill Lynch index of euro-denominated high-yield notes.

A spokeswoman for Bologna, Italy-based Manutencoop wasn’t immediately available for comment about the statement. A Banca Farmafactoring spokeswoman didn’t answer calls or reply to e-mails.

Manutencoop said in the statement that Telecom Italia is the only large private-sector client able to cancel a contract as a result of its CEO’s indictment. The telecommunications provider has asked to terminate a cleaning and facilities-management contract. Manutencoop may also lose a state school-cleaning deal after it was fined 48.5 million euros for flouting competition rules when bidding for the work.

Moody’s Investors Service this month downgraded Manutencoop to B3, six levels below investment grade.

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