CEEMEA OPEN: Croatia soaks up excess demand in CEE

• Cash USTs mostly richer heading into the European start. The long-end outperforms (30/10yr yields off 1 to 2bp). The short-end is flat. The 10-yr yield has hit a lower-low 4.4945%, but within the recent range. 2s10s sit 28.27bp, flatter overnight but off Monday's tight.

• Overnight, the Fed's Jefferson said that the CB should move cautiously on rates suggesting the FOMC shouldn't be in a hurry to change its current stance.

• EGB debt futures are higher. Mar25 Bunds/OATs up 30/25 ticks. The French PM is expected to survive two no-confidence votes today which would mean France finally has a 2025 Budget!

• A mixed session for Asia-Pac equity. Nikkei is marginally higher, Hang Seng off 1%, Shanghai -0.6%. KOSPI leads the way up over 1%. European/US equity futures are all lower.

• Brent trading a relatively narrow range (inside day so far), holding close to yesterday's $76.20 close

Fresh in the CEEMEA Pipeline

• No new additions to the pipeline.

On the Radar

• The Republic of Croatia, rated A3 (Stable) by Moody's / A- (Positive) by S&P / A- (Stable) by Fitch, has landed a EUR2bn 12yr (Feb-2037) Reg S Cat 1 Senior Unsecured issue at m/s+90bp, in from the m/s+95bp area guidance and m/s +120bp area IPTs. The deal attracted over EUR4.4bn in final demand, including EUR175mn in JLM interest.

• There were two new entrees to the pipeline on Tuesday. Banque Ouest Africaine de Developpement, the regional development bank of the member states of the West African Economic and Monetary Union (WAEMU), rated Baa1 stable by Moody's and BBB negative by Fitch, is advertising a USD bmk Reg S 30NC5 hybrid sustainability offering. A series of fixed-income investor calls commenced yesterday (February 04).
  • BOAD has mandated BNP Paribas, HSBC, J.P. Morgan, SMBC and Societe Generale as Joint Lead Managers and Joint Bookrunners.
  • The bond has an expected rating of Baa3 by Moody’s.
  • A link to the net roadshow can be found here and the sustainability bond framework here.
  • The issuer was last in the markets in January 2021 (EUR-offering), although it was back in October 2019 where it landed a USD830mn Senior Unsecured note at 4.70% after attracting over USD2.5bn in final demand.

• In addition, Saudi Arabian Mining Company, the largest multi-commodity mining and metals company in the Middle East with ownership of 65.2% by the Public Investment Fund, rated Baa1 with a Stable outlook by Moody’s and BBB+ with a Stable outlook by Fitch, will commenced a series of fixed income calls yesterday (February 04) and continue today (February 05) on a USD bmk Reg Senior Unsecured Sukuk offering consisting of a 5- and/or 10-year traches.
  • The issuer has mandated Citi and HSBC as Joint Global Coordinators, Joint Active Bookrunners and Joint Lead Managers together with Al Rajhi Capital, J.P. Morgan and SNB Capital as Joint Active Bookrunners and Joint Lead Managers. BNP PARIBAS, BSF Capital, GIB Capital, Natixis and Standard Chartered Bank are acting as Joint Passive Bookrunners and Joint Lead Managers. HSBC also acted as Ratings Advisor.

• Still on the sidelines, Limak Yenilenebilir Enerji A.S.one of the largest purely renewable energy generation players in Türkiye with 10 power plants constituting close to 1GWe of installed capacity across Hydro, Solar and Geothermal, commenced fixed income investor calls on Friday (January 31) and earlier this week (February 03) to advertise an inaugural USD450mm Reg S 5.5NC2 (5.2yr WAL) Senior Amortising Green Note.
  • LRE has mandated BofA Securities and J.P. Morgan as Joint Global Coordinators and Bookrunners, alongside Emirates NBD Capital as a Joint Bookrunner.
  • Note, according to Captial Markets Board, the issuer received approval to sell up to USD600mn green bonds last week.
  • The link to the net roadshow can be found here.

Priced Deals

What to watch on Wednesday

• In CEEMEA, spotlights will be on the NBP rate decision, where policymakers are widely expected to leave rates on hold at 5.75%. Focus will be in the tone of the post-decision statement, as well as on Governor Glapinksi’s presser tomorrow.
  • Also on tap, Russian December Retail Sales, Unemployment Rate, Industrial Production and CPI WoW (16GMT).

• In the US, ADP employment change (13.15GMT) is projected to rise to 150k in January after December's 122k. The trade deficit is expected to widen to $96.8bn in December from $78.2bn (is this a Trump focus?). Canadian January services (final) and composite PMIs are due (14.30GMT). The US (final) print is seen a touch lower at 52.9 and 52.5 from 52.8 and 52.4, respectively. Finally, US services/composite ISMs (15GMT). Services lis predicted at a marginally lower 54 (winter storms impacted). Given it is payrolls week, the employment component will be of great interest.

• Central bank speakers to talk include the ECB's Lane (14GMT), the Fed's Barkin (12.30GMT/14GMT), Goolsbee (19.30GMT) and Bowman (20GMT). The ECB will publish wage tracker indicators (9GMT), an important input into GC thinking.

Wider market Sentiment

• USD Index at 107.71
• UST 2yr/10yr at 4.205%/4.496%
• Bund 2yr/10yr at 2.034%/2.378%
• Brent at $75.97/brl

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