What to Watch: Aston Martin bond, Boohoo growth, Thomas Cook's Condor

Edmund Heaphy
Finance and news reporter
An Aston Martin Vanquish Zagato Coupe in Chichester, England. Photo: Martyn Lucy/Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Aston Martin raises $150m from bond issue

Aston Martin (AML.L) on Wednesday announced it had raised $150m (£120m) from a bond issue, as the UK-based carmaker seeks to add cash to its balance sheet to fund a new sport utility vehicle.

Shares in the company fell by more than 5% after the company said that the interest rates on some of the notes in the bond — which are effectively loans — were priced at 12%.

“These rates are very high and are a major red flag that investors consider the car company to be a high risk entity,” said Russ Mould, the investment director at AJ Bell, in a note.

“Metro Bank couldn’t get enough support for its bonds earlier this week at 7.5% despite investors around the world scrambling for new sources of income in a low interest rate environment.”

“So Aston Martin pricing its debt at up to twice this level would suggest it really needs the money and has had to bow to investors’ demands.”

Mark Wilson, the chief financial officer of Aston Martin Lagonda, blamed “macroeconomic headwinds and uncertainty” and said that the group required “flexibility” in its financing arrangements.

The carmaker is hoping that its soon-to-be-launched DBX vehicle will bolster its finances.

Boohoo cites 'outstanding growth' as sales surge

Revenue at Boohoo (BOO.L) surged by 43% in the first half of its financial year, pushing sales figures at the online fashion retailer above £1bn in a year for the first time ever.

The company reported sales of £565m in the six months to the end of August, beating analyst expectations of £540m.

Before-tax profits, which surged 53% compared to the same period last year, also beat expectations, coming in at £60.7m.

“The group's performance over the half year has been outstanding, with strong momentum across the business driving impressive revenue growth in all our brands and in all key focus territories,” the company said on Wednesday.

Earlier this month, Boohoo raised its own full-year forecasts, saying it expected sales growth to come in between 33% and 38%. It made no adjustments on Wednesday.

The strong growth was seen in particular in its Nasty Gal and PrettyLittleThing divisions.

Germany throws Thomas Cook-owned Condor a €380m lifeline

The federal government in Berlin has approved a €380m (£336m) six-month loan for German charter airline Condor, which belongs to the bankrupt Thomas Cook group.

The airline said it was now on the lookout for a new owner, who could be either a “strategic investor or a financial investor.”

Half of Condor’s loan was put up by the state of Hesse, where Condor is based, and the other half by the German government.

Economy minister Peter Altmaier said the government is in talks with the European Commission, which needs to approve the loan.

“Since our liquidity was used up by our insolvent parent company for the seasonally weaker booking period, we need this bridge financing for the winter,” said Condor CEO Ralf Teckentrup.

“The commitment is an important step in securing our future.”

Thomas Cook folded on Monday, after failing to secure further bailout cash. Its collapse has put 22,000 jobs at risk worldwide, of which 9,000 are in the UK.

Dozens of Sainsbury's and Argos stores to close down

Dozens of Sainsbury’s (SBRY.L) and Argos stores are to close as part of a £500m cost-cutting drive over the next five years.

Up to 15 Sainsbury’s supermarkets, up to 40 convenience stores and up to 70 Argos stores will be shut down under the plans.

But Sainsbury’s, which bought Argos in 2016, said it also planned to open around 10 new supermarkets, 80 Argos outlets in Sainsbury’s and 110 new convenience stores.

The company did not say in its latest trading update on Wednesday what the shakeup could mean for staff numbers, or which stores will be affected.

The group raised its target for debt reduction to at least £750m over three years, with plans to lower it by at least £300m in the 2019-20 financial year alone.

Collapse of 'Boris Bus' maker puts 1,400 jobs at risk

One of Northern Ireland’s biggest employers, coach-builder Wrightbus, is expected to go into administration this week, putting 1,400 jobs at risk.

The Ballymena-based company is best known for making London’s double-decker Routemaster bus, known as the “Boris bus” — since it was commissioned by prime minster Boris Johnson when he was mayor of London in 2007.

It is one of Northern Ireland’s largest employers and its loss would be a major blow in the same week as travel firm Thomas Cook’s collapse.

Historic shipbuilder Harland and Wolff also fell into administration this year — yet another blow to Northern Ireland’s manufacturing sector and economy.

European stocks fall

European stocks fell on Wednesday, with the FTSE 100 (^FTSE) down 0.90%, Germany’s DAX (^GDAXI) down 1.17%, and France’s CAC 40 (^FCHI) down by 1.53%.

The pound fell by 0.44% against the dollar (GBPUSD=X) to around £1.243. It similarly fell against the euro (GBPEUR=X).

What to expect in the US

Futures are pointing to a lower open for US stocks.

S&P 500 futures (ES=F) are down by 0.40% and Dow Jones Industrial Average futures (YM=F) are down by 0.34%. Nasdaq futures (NQ=F) are down by 0.62%.