BlackRock Global Long/Short Credit Absolute Return Credit
Case Study: Event Trade / Liability Management
Background
In late 2017 Walgreens received regulatory
clearance for a deal to acquire 50% of Rite Aid's
stores for $4.4 billion
●
●
Rite Aid announced it would use the proceeds from
the Walgreens deal to de-lever its balance sheet
In February 2018, Rite Aid agreed to go through a
merger with Albertson's
Strengthening credit with positive catalyst
Bond Price
110
105
100
95
90
85
Sep-17
Oct-17
Nov-17
Dec-17
The Opportunity
●
Long Rite Aid Debt
Rite Aid Debt
We identified multiple bonds within the Rite Aid
capital structure that were attractive and took a long
position
We hedged the long exposure with a small equity
short position and CDS to minimize downside risk
Jan-18
Feb-18
Mar-18
Source: Bloomberg, as of 3/31/18. Trade is represented by a 6.125%, 2023 maturity bond for Rite Aid Corporation. For illustrative purposes only. As of 3/31/18, the fund had a 1.17%
position in Rite Aid Corporation.
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FOR FINANCIAL PROFESSIONAL USE ONLY. NOT TO BE SHOWN OR DISTRIBUTED TO THE GENERAL PUBLIC.
USR0418U-470515-1498457
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