Goldman Sachs traders argue a lot of the negativity is already reflected in prices, including the chance UK regulators nix Nexfibre Networks Ltd.'s purchase of Netomnia Ltd. and cut off expected cash to Virgin Media O2, according to people with knowledge of their thinking. Goldman had been steering clients toward some shorter-dated notes last month, those people said.
On the flip side, Morgan Stanley's desk is telling clients to sell or short the bonds, citing rising odds of a balance sheet reset, according to different people briefed on the view who requested anonymity because the discussions are private. In their view, even a green light for the Netomnia tie-up would only buy time and still wouldn't head off a restructuring, possibly via an LME, that leaves creditors in a weaker spot.
Goldman's camp also highlights other ways Virgin Media could slim down leverage, including carving out its network and reducing both capex and opex, according to the people. Meanwhile, the Netomnia deal is still in play. The UK Competition and Markets Authority is due to make a final call by Dec. 15, with Oct. 16 set for any proposed fixes to address competition concerns and Oct. 23 as the cutoff for public feedback on the watchdog's interim findings. Virgin Media is also slated to report Q3 2026 results on Nov. 3.
Disagreement among bondholders is where the real price discovery happens. Market Briefs covers credit free every morning.
The 10-day rout has dragged some Virgin Media debt deep into distressed territory and bled into the wider junk-bond market, where the company is a heavy borrower. As of Oct. 9, Virgin Media ranked as the No. 7 constituent in Bloomberg's Pan-European High Yield Index, with 11 sterling and euro bonds together accounting for more than 1.2% of the benchmark. The selloff rattled investors to the point that they questioned Liberty Global Ltd. executives, the company's shareholder, during a London leveraged-finance conference.
A Morgan Stanley spokesperson declined to comment. Goldman Sachs did not respond to a request for comment.
This is a classic two-lane narrative: one path says the pain is priced, the other says more downside if a rework lands. Morgan Stanley's traders estimate Virgin Media can support only about £14 billion of debt (roughly $18.5 billion), which is well below the company's recently reported total near £22 billion. They also think the company cannot bring leverage down fast enough before maturities start hitting in 2029 and that any refinancing would likely be expensive.
Liberty's leadership, when asked last week whether they would rule out an LME, said they are not at the point of making that call. For everyday investors, the takeaway is simple: these bonds sit at the center of a real debate, and the calendar between now and mid December could be the difference between stability and another round of turbulence.
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