RATINGS: Array Of Updates Due After Hours, Mix Of Outlooks
Potential sovereign rating reviews of note scheduled for after hours on Friday include:
- Fitch on Austria (current rating: AA+; Outlook Negative), Estonia (current rating: A+; Outlook Stable) & Hungary (current rating: BBB; Outlook Stable)
- Moody’s on Norway (current rating: Aaa, Outlook Stable) & South Africa (current rating: Ba2, Outlook Stable)
- S&P on Malta (current rating: A-; Outlook Stable) & Slovenia (current rating: AA-; Outlook Positive)
- Morningstar DBRS on Austria (current rating: AAA, Stable Trend) & Estonia (current rating: AA (low), Stable Trend)
- Please use this link to access the indicative sovereign rating review schedule covering the five most notable rating agencies for 2025.
- Note that this schedule is indicative only and ratings can be reviewed on an ad-hoc basis. Rating agencies may also adjust their schedules during the year.
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GERMANY: Pistorius Seeks E60bln/Year For Defence As Merz Visits Paris & Warsaw
Reuters reports that Defence Minister Boris Pistorius is seeking a significant increase in Germany's annual defence budget, according to two of its sources. Pistorius, who hails from the centre-left Social Democrats (SPD) and in opinion polling is one of Germany's most popular politicians, is aiming for more than E60bln per year in new defence spending from 2025 onwards, according to one of the sources. SIPRI reports German defence spending came in at USD88.5B in 2024.
- In the run up to his (chaotic) confirmation as chancellor on 6 May, Friedrich Merz has sought to emphasise that his gov't will not only take a leadership role in European security with rhetoric, but by committing to significant increases in defence spending.
- Indeed, Merz is using his first full day in office not to shore up his domestic alliances, but instead to travel to Paris and Warsaw for talks with French President Emmanuel Macron and Polish PM Donald Tusk, respectively.
- Roderich Kieswetter, a lawmaker from Merz's centre-right Christian Democratic Union (CDU), told Politico, "What’s needed now is a credible German contribution to Europe’s deterrence posture [against Russia]...[Merz] must meet [Macron and Polish Prime Minister Donald Tusk] with a tangible and credible military and personnel commitment.”
- A major uptick in defence spending from Germany is seen as crucial to Merz's efforts to show unity of purpose from European countries ahead of what could prove a frosty NATO summit in the Netherlands in mid-June.
GERMANY: Defence Ministry Seeking "Drastic" Increase in Budget
Reuters reports that Germany's Defence Minister is seeking a drastic increase in the German annual defence budget, aiming for "more than €60bln".
The Reuters headline raises a few questions: is the €60bln quoted in addition to current defence spending? Per year or across the current parliamentary term?
- An increase in defence spending of sorts is certainly expected - Germany spent ~€90bln on defence in 2024, so an extra €60bln per annum would be a significant ramp higher per year (+67%), but it's not clear whether this is spread across the current parliament, which would be a much more modest increase.
- €150bln per annum would equate to well over 3% of GDP, which is inside the range of some sell-side estimates, albeit at a much faster pace. Goldman Sachs recently estimated military spending would ramping up to 3% of GDP by 2027 and to 3.5% after that.
- Looking for further clarity as the Reuters story raises several timeline questions.
MNI: UK APRIL CONSTRUCTION PMI 46.6 (FCAST 46.0, MARCH 46.4)
- UK APRIL CONSTRUCTION PMI 46.6 (FCAST 46.0, MARCH 46.4)
