CEEMEA OPEN: SEC advertises dual-tranche Sukuk

• Cash USTs have modestly richened overnight, with the belly of the curve leading the bid. The 5-year yield is up 1bp to trade steady around 4.3379% - 2bp lower than Friday's peak. The 10-year yield is flat around 4.4866%.

• This, as markets absorbed news that Trump will announce 25% tariffs on steel/aluminum imports from all countries on Monday, though no start date was mentioned. He also plans to introduce reciprocal tariffs on countries taxing US imports, likely announced Tuesday or Wednesday and taking effect immediately.

• Elsewhere and following Friday's labour report, US OIS curves now see a ~5% chance of a rate cut at next month's meeting, down from around 15% seen last week.

• Also over the weekend, China January CPI accelerated slightly faster-than-expected to 0.5% y/y from 0.1% - although at those levels, still doing only very little to dispel prevailing worry over deflation risks. PPI came in unchanged, -2.3% y/y.

• EGB debt futures kick off the week on a firmer footing, with Bunds and OATs up 10-15 ticks. It looks like the Scholz/Merz TV debate was a 'draw'.

• US equity future markets are higher, Nasdaq minis +0.54%. SPX minis +0.27%. European equity futures also higher, FTSE is up 0.14%. Asia cash equities are mixed.

• Brent is firmer, although 11c off the o/n best of $75.29/brl. Gold trades just under the intraday high of $2884.33 and just a touch under the record top seen on Friday (post-NFPs).

Fresh in the CEEMEA Pipeline

On the Radar

• Saudi Electricity Company, rated Aa3/A/A+ by Moody's/S&P/Fitch, is advertising a USD-denominated Reg S Senior Unsecured dual-tranche Sukuk (of which one tranche may be in green format) consisting of 5-year and 10-year tranches.
  • The SEC has mandated HSBC and Standard Chartered Bank as Joint Global Coordinators to arrange a series of fixed income investor calls, commencing on Monday 10th February 2025. Together with the Global Coordinators, Abu Dhabi Commercial Bank, First Abu Dhabi Bank, Mizuho, MUFG, SMBC and IMI-Intesa Sanpaolo have been Mandated as Active Bookrunners. In addition to the Active Bookrunners, Alistithmar Capital, BofA Securities, ICBC International Securities Limited, BNP Paribas, Emirates NBD Capital, NATIXIS, Dubai Islamic Bank PJSC, Bank of China and SNB Capital have been appointed as Passive Bookrunners. MUFG and SMBC are also acting as Joint Green Structuring Agents.
  • The issuer was last in the markets in February last year, where it landed a USD 5- and 10-year dual tranche that priced at USD800mn at T+90bps and USD1.40bn at T+110bps, respectively.
  • Leads have circulated the following comps:

• It’s worth noting that JPMorgan has said that despite a number of alternative funding deals with developing-nation governments in recent months, the public debt markets will continue to be the main venue for EM borrowers in 2025. Within CEEMEA, JPM expects a significant pickup in issuance from Africa across sovereigns and corporates. They added that this year “will certainly be more volatile, especially with US policies being less predictable.” “But the pipeline is still very strong. So all-in-all, we expect that issuance volumes in CEEMEA will likely not be far off from last year’s record.”

Priced Deals

• No new priced deals.

What to watch on Monday

• In CEEMEA, a quiet agenda ahead with only the Czech shared of unemployed (8GMT) and Hungary Budget Balance (10GMT).

• In the US, just the NY Fed 1-yr inflation expectations ahead of the January CPI print later this week (Wednesday).

• Central bank speakers to talk include only the ECB’s Lagarde (14GMT).

Wider market Sentiment

• USD Index at 108.22
• UST 2yr/10yr at 4.285%/4.485%
• Bund 2yr/10yr at 2.039%/2.368%
• Brent at $75.27/brl