Happy hour is over: sin stocks face refinancing headwinds
XLP•Higher rates, bond yields and credit spreads could weigh on European alcohol and tobacco earnings, Citi says, estimating a sector-wide EPS impact of 0.9% in FY27 and 1.8% in FY28.
1. Refinancing pressures
Citi sees refinancing maturing bonds as the main earnings headwind for Europe’s alcohol and tobacco companies over the next two years. Although most debt is fixed-rate—80% for beverages and 94% for tobacco—the risk is replacing low-coupon bonds at materially higher rates. Citi sees CCEP, Pernod Ricard, Campari, AB InBev and Diageo as most exposed, while Imperial Brands, CCH and Carlsberg appear least impacted in 2027.
