New bonds issued by the German meal kit delivery company HelloFresh on July 1st have exhibited weak performance in the secondary market, with over 10% of the bonds now available for lending and almost all of those available bonds already borrowed, indicating strong investor sentiment for short selling.

According to statistics from the financial trading and data analytics firm EquiLend, the borrowing ratio for HelloFresh's new bonds exceeds 10%, which is more than five times the average level for European corporate bonds, approximately 2%. Concurrently, the borrowing cost for these bonds has climbed to 200 basis points, significantly higher than the average financing rate of around 50 basis points for comparable bonds. Nancy Allen, Head of Data and Analytics at EquiLend, stated that these figures indicate the supply of bonds available for lending has failed to keep pace with the demand from short sellers.

This bond issuance, with a size of €350 million, was launched at face value on July 1st. However, its current trading price has fallen to approximately 95% of its face value, signifying that investors are pricing in a higher risk premium for the company's operational and debt outlook.

This wave of short selling is directly linked to a downgrade action by the rating agency Standard & Poor's two months ago. Citing weak sales in the meal kit and ready-to-eat food business, S&P downgraded HelloFresh's credit rating to "junk" status. In its rating report, S&P also identified consumer income pressure, intense industry competition, and rapid technological change as core risks for the company.