HYBRIDS: AroundTown (ARNDTN: Perps BB+)
• ARNDTN 7.125 Call30 currently screening Sub_Sen +205bps with a reset of 5yr +450.8
• Shorter dated bonds are trading with very wide Sub_Sen levels of:
• ARNDTN 1.625 Call26 Sub_Sen +496bps; Reset 5yr +241.9
• ARNDTN 5% Call29 Sub_Sen +392bps; Reset 5yr +234.9
• The shorter bonds have rallied 2.7-2.8pts over a week, outperforming the Call30 by 70-80c.
• Whilst they do have low Reset levels it does look like there is increasing confidence that AroundTown will refi when the time comes in which case these Sub_Sen spreads do still look very wide notwithstanding the recent moves.
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EGB SYNDICATION: Germany 30-year Syndicated Tap: Guidance
- EUR Benchmark Tap of DBR 2.9% 08/15/56 DBR+3.25 Area (MNI expects E4-6bln)
- Benchmark: DBR 2.5% 08/15/54
- Coupon: 2.9%, annual, act/act, long first
- Settlement: May 13, 2025
- ISIN: DE000BU2D012
- Bookrunners: Barclays, Citi (B&D), CA-CIB, DZ Bank, GS, JPM. Remaining members of the Bund Issues Auction Group will be invited into the co-lead group
- Timing: May price today
Details as per BBG
EUR: An underlying bid goes through in the EUR
- A small underlying bid in the EUR is going through combined with some offers in the USD, the EUR is testing intraday highs against the USD, GBP, CHF, AUD, SEK, and NOK.
- While the Aussie is the worst performer, next resistance in EURGBP comes at 0.8557 High Apr 28.
(Chart source: MNI/Bloomberg).
GILTS: /STIR: Citi Eye BoE Guidance, Bank Rate To Remain Main Support For Gilts
Citi note that “with a 25bp cut to Bank Rate widely expected, the focus at this week’s MPC meeting will be on the communication”.
- Their economists view the outlook as “more unambiguously disinflationary and think the MPC will still value time-optionality for now and therefore expect ‘gradual and careful’ to remain the main guidance for at least this meeting”.
- They also suggest that “the BoE could reaffirm that further QT (beyond September) is subject to market conditions and targeted QE is still a backstop, but the primary support for gilts is likely to come via lower Bank Rate”.
