CEEMEA OPEN: South Africa sells first USD deal since 2022, attracts impressive demand

• The Dollar continued to push higher o/n and has now rose to 106.126, although is off Tuesday's best of 106.178. Late yesterday, the Fed's Barkin said inflation might be under control or risk getting stuck & the labour market might be fine or continue to weaken.

• Kashkari thinks upside inflation surprises could prompt a pause in Dec, he wouldn't opine on the impact of possible tariffs on inflation & said it might take 'a year or two' to achieve 2% inflation.
• US inflation takes centre focus today and the headline is seen rising to 2.6% y/y vs 2.4% the month previous, with the sticky core seen the same at 3.3%. Implied probability of a Fed rate cut for December stands at 49% currently. That looks the classic coin toss, and any data surprises here could impact.
• EUR/USD dipped below 1.06 on Tues for the first time since the 2nd Oct last year (1.0448 the next big target).
• Bitcoin traded $86389.9 o/night vs a peak of $89956.4 & a record $89968.1 yest.
• Nikkei shed 1,85% to an 8-day low & Hang Seng down 0.75% to a 7 wk nadir.

Fresh in the CEEMEA Pipeline

• No fresh additions to the pipeline.

On the Radar

• Whilst the pipeline is now empty, CEEMEA issuance picked up on Tuesday, with two issuers landing deals. That includes Trans-Oil Group under Argavi Finance International DAC, which priced a USD550mn Reg S senior secured guaranteed 5NC2 Eurobond offering at 11.375%, in from the guidance of the 11.5% area and mid to high 11s IPTs. The deal attracted over USD1.1bn in final demand, including USD37mn in JLM interest.
• The Republic of South Africasold its first Dollar bond since 2022 on Tuesday, moving quickly through the pipeline on strong demand (combined demand of USD10.3bn, excluding JLM interest), signalling confidence in the GNU formed earlier this year. South Africa landed a USD3.5bn dial-tranche Reg S Senior Secured issue in the following format:
  • USD2bn 12yr (Nov-2036) at 7.10%, in from the 7.40%a IPTs and 7.150%a guidance.
  • USD1.5bn 30yr (Nov-2054) at 7.95%, in from the 8.25%a IPTs and 8%a guidance.
  • The bookrunners were Citi and Goldman Sachs.

Priced Deals

What to watch on Wednesday

• In CEEMEA, the main event today will come after hours (16GMT) and take shape in the form of Russian CPI, expected to climb to 8.80% y/y in October from 8.26% prior despite after the CBR hiked rates to a record high and by 200bps to 21% last month (read the preview here).
  • Also due today, Czech C/A (09GMT) and Polish C/A, Trade Balance (13GMT).
• In the US, CPI takes the focus (13.30GMT), forecast to accelerate to 2.6% y/y in October from 2.4% previous and steady at 0.2% m/m. Core CPI is seen unchanged at 3.3% y/y and 0.3% m/m.
• Central bankers expected to speak today include the Fed's Kashkari, Williams, Logan, Musalem & Schmid.

Wider market Sentiment

• USD Index at 106.126
• UST 2yr/10yr at 4.345%/4.435%
• Bund 2yr/10yr at 2.144%/2.386%
• Brent at $71.98/brl

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