EU CAPITAL GOODS: ABB: Legrand Interest
Oct-08 13:08
(ABBNVX; A2/A/NR)
ABB and LRFP EUR curves trade on top of each other. If a deal were to happen, there could be a debt component taking both wider. It doesn’t seem like an obvious transaction to us, and the price has moved away from ABB since the reported talks. We do not expect meaningful spread movement on this.
- Bloomberg reports that ABB held informal talks last year. The $5.3bn additional firepower from the Robotics sale could lead to renewed speculation.
- Legrand has a $48bn EV before any takeover premium, up from $29bn at year end. Clearly an all-cash bid would not be an option, with a cash-and-stock deal a more likely scenario.
- ABB targets strong investment grade and has been A rated since 2008. Current leverage is low and it could potentially take on more debt from here.
- There are questions regarding structure, headquarters, listing and fit. While both are exposed to electrification trends, ABB is mostly involved in higher tech solutions.
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SLOVAKIA AUCTION PREVIEW: On offer next week
Sep-08 13:06
Slovakia has announced it will be looking to sell the following at its auction next Tuesday, September 16:
- the 3.625% Jun-33 SlovGB (ISIN: SK4000023230)
- the 3.75% Feb-35 SlovGB (ISIN: SK4000022539)
- the 0.375% Apr-36 SlovGB (ISIN: SK4000018958)
- the 4.00% Feb-43 SlovGB (ISIN: SK4000022547)
FRANCE T-BILL AUCTION RESULTS: 13/26/52-week BTFs
Sep-08 12:55
| Type | 13-week BTF | 26-week BTF | 52-week BTF |
| Maturity | Dec 10, 2025 | Mar 11, 2026 | Sep 9, 2026 |
| Amount | E3bln | E1.9bln | E2.155bln |
| Target | E2.6-3.0bln | E1.5-1.9bln | E1.8-2.2bln |
| Previous | E3bln | E1.753bln | E1.89bln |
| Avg yield | 1.99% | 2.006% | 1.997% |
| Previous | 1.98% | 2.009% | 2.020% |
| Bid-to-cover | 3.96x | 4.34x | 3.27x |
| Previous | 3.01x | 4.64x | 3.79x |
| Previous date | Sep 01, 2025 | Sep 01, 2025 | Sep 01, 2025 |
BONDS: OAT Futures Outperform Ahead of Bayrou No-confidence Vote
Sep-08 12:48
Major EGB futures continue to inch higher, with OATs outperforming (+38 ticks at 121.87 today).
- Initial resistance in OATZ5 is the Aug 15 opening gap at 121.95, clearance of which would expose the Aug 14 high at 122.61.
- PM Bayrou will start delivering his general policy address to the National Assembly at 1400BST/1500CET.
- It is unlikely to be eventful, more of a formality ahead of his near-inevitable ousting later this evening.
- The 10-year OAT/Bund spread is 2.5bps tighter at 76bps today. Bayrou falling to the no-confidence vote is already in the price.
- We wrote earlier this morning that market prices may already incorporate an expectation for a new administration to make budget concessions. This may limit the scope for further OAT/Bund spread widening in the aftermath of the vote.
Bund, BTP and Gilt futures also registering fresh session highs in recent trade. Market moving headline flow remains light.
