CEEMEA OPEN: SRC lands dual tranche ahead of new week
- The centre-right CDU/CSU won the German Election which will allow Friedrich Merz to begin Coalition talks, probably with the outgoing SPD who finished third (worst result since WWII). The right-wing Afd finished second. Merz says that he wants to form a new government as quickly as possible as he looks to tackle Germany's economic problems.
- Mar25 Bunds have been up to 24 ticks lower in Asia-Pac trade, within Friday's extremes. Oats have outperformed. Dax futures have surged and the Euro has strengthened given an expectation of a more business friendly administration and possible debt brake reform that will lead to more government spending. The result won't impact the latest German confidence indicator. The headline IFO business climate (9GMT) is seen rising to 85.8 (within the last six month range) in February from 85.1. The current assessment is f/c to rise a touch to 86.3 from 86.1 and expectations are estimated to increase to 85 from 84.2. All of which highlights the scale of the new government's task.
- Meanwhile, note that overnight cash UST trade/JGBs closed today/tomorrow due to Emperor's Birthday holidays in Japan and will reopen once London reports for duty. TYH5 (which rolls this coming Friday) has given back a marginal amount of Friday's gains. The Fed's Goolsbee noted that Friday's sentiment reports weren't great, but 2/3 months of such reads are needed 'to count'.
- Over the weekend, the US President demanded 'more aggressive' cuts to government spending/waste. The French President is today in Washington to meet President Trump with Ukraine matters topping the agenda.
- Asia-Pac equity markets are mostly lower. Hang Seng/Shanghai off 0.55%-0.45%. ASX ended marginally higher. Brent is flat and in a narrow range.
Fresh in the CEEMEA Pipeline
- No new additions to the pipeline.
On the Radar
- There are currently no deals on offer in the CEEMEA pipeline on Monday morning.
- Saudi Real Estate Refinance Company, rated A1 (Stable) by Moody’s, A- (positive) by S&P and A+ (Stable) by Fitch, the primary provider of housing refinancing solutions, wholly-owned by the Public Investment Fund of Saudi Arabia, has reached final terms on its USD2bn Reg S senior Sukuk dual tranche offering in the following format:
- USD1bn 3yr at T+80bps, in from the T+80-85bps guidance and T+110bps area IPTs. Books topped USD5bn, excluding JLM interest.
- USD1bn 10yr at T+98bps, in from the T+105bps area guidance and T+135bps area IPTs. Final demand topped USD6.25bn, excluding JLM interest.
Priced Deals
Date | Issuer | Ccy | Amount (m) | Coupon | Maturity | Yield | Spread | IPTS to Pxd | Book size (m) | Coverage | NICs |
20-Feb | SRC Sukuk Limited | USD | 1000 | 5.000 | 27/02/2028 | 5.068 | T+80 | -30 | 5000 | 5.00 | |
20-Feb | SRC Sukuk Limited | USD | 1000 | 5.375 | 27/02/2035 | 5.479 | T+98 | -37 | 6250 | 6.25 |
What to watch on Monday
- In CEEMEA, Polish Retail Sales for January are due (9GMT).
- In the US, the Chicago Fed Nat activity index is due (13.30GMT) ahead of the Dally Fed manufacturing activity (15.30GMT).
- Central bank speakers to talk all from the BoE with Lombardelli (9GMT), Ramsden (13.15GMT) and Dhingra (18GMT).
Wider market Sentiment
- USD Index at 106.30
- UST 2yr/10yr at 4.221%/4.441%
- Bund 2yr/10yr at 2.103%/2.489%
- Brent at $74.42/brl
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