EU FINANCIALS: Banco Comercial Portugeus - Moodys upgrades BCA - Tier 2 rising star
Sr Pref remains - Baa1
Tier 2 Ba1 -> Baa3
The most recently issued Tier 2 - - goes to IG
The other 2 Tier 2 bonds (PTBCPGOM0067 & PTBCPJOM0056) are rated by Moody's and Fitch. Fitch remains at BB+ Pos
We recently highlighted in our BCPPL earning preview that the name was a potential rising star in tier 2 and that the bonds may screen wide to IG peers if upgraded. https://mni.marketnews.com/3H6MYyQ
https://ratings.moodys.com/ratings-news/443420
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STIR: Citi Maintain SFIM5/M6 Flattener Recommendation
Citi remain “positioned for the market to keep adding BoE cuts as tariffs announcements turn to economic reality via SFI M5/M6 flatteners”.
- They believe that “worries about economic activity should allow the BoE to look through higher near-term inflation and induce a faster, catch-up easing cycle which should support a lower yield environment across the term structure over the medium-term”.
GERMAN AUCTION PREVIEW: New 1.70% Jun-27 Schatz
This morning, Germany will hold its sixth Schatz auction of the year. On offer will be E5.0bln of the new 1.70% Jun-27 Schatz.
- The E5.0bln size is in line with the last Schatz launch on January 28.
- Recent Schatz auctions have passed mostly smoothly, with solid bid-to-covers (in a 2.09x to 3.46x range since August) and bid-to-offers (1.69x to 2.63x range since August). The low prices were above the secondary market mid-prices throughout 2024/5 before the February 18 Schatz auction saw them equal to each other, and then the low price was lower than the mid-price on March 11 - both auctions appeared to have not seen an adverse market reaction, however.
- Additionally, the last Schatz auction on April 1 appeared strong with the bid-to-cover at 3.46x (multi-year high), and the bid-to-offer at 2.63x.
- However outside of Schatz auctions, there have been some weak German auctions recently. Last week's Bobl auction was very soft, the 10-year Green Bund auction the week prior was also soft and last week's 30-year Bund auction was a little more successful but still disappointing relative to other recent auctions.
- Today's auction will therefore be watched more closely than usual.
- Ahead of the Easter holidays, Schatz positioning appeared increasingly long (see the MNI PI).
- The next German auction will be tomorrow's E4bln of the 2.50% Feb-35 Bund (ISIN: DE000BU2Z049), while the 1.70% Jun-27 Schatz will be reopened next on May 13, for E4.5bln.
- Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.
SOFR: SFRU6/H7 Trades
SFRU6/H7 ~4.2K trades at 9.5, initiated by a seller to start.
