EU BASIC INDUSTRIES: BASF: Capital Markets Day (BASGR; A3/A-/A)
• Will keep Environmental Catalyst and Metal Solutions (ECMS) for longer. EUR7bn sales in 2024. (EUR 65.3bn was total group sales for reference).
• Brazilian Paints was sold for $1.15bn closed 1st Oct. The company also announced the sale of a food and health business to Louis Dreyfus for an undisclosed amount on 30th Sep.
• Will IPO a minority stake in the Agri Solutions business in 2027. EUR 9.8bn sales in 2024.
• Cost savings of EUR 1.6bn expected for 2025 is ahead of previous EUR 1.5bn.
• Working capital efficiencies combined with reduced capex and cost savings are a focus. As is maintenance of Single A rating.
• Aims to pay EUR 8bn in dividends over 2025-28 and to make EUR 4bn in share buybacks 2027-28. The share buybacks may be accelerated depending on Coatings transaction.
• Sep '24 targets for EBITDA remain in place (based on "mid to upcycle conditions"....) with EBITDA EUR 10-12bn in 2028 and cumulative free cash flow of >EUR12bn over the period.
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EUROPEAN INFLATION: HICP tracking at 2.0% with marginal downside risks
With the majority of Eurozone countries having now released flash HICP prints (summing to 92.4% of the Eurozone total) we track the pan-Eurozone print at 2.0% with slightly risks skewed marginally to the downside (albeit we have to calculate some of the tracking from rounded figures so there is still a chance of a 2.1% print in line with the Bloomberg consensus).
GILT SYNDICATION: 4.75% Oct-35 gilt: Spread set
- Spread set at 4.50% Mar-35 Gilt +8.25bp (guidance was +8.25/+8.75bps)
- Size: GBP Benchmark (MNI expected GBP8-12bln with risks skewed to the higher end given the large book size
- Books in excess of GBP125bln (inc JLM interest of GBP10.2bln)
- Maturity: 22 October 2035
- Expected Settlement: 3 September 2025 (T+1)
- Coupon: 4.750% SA, ACT/ACT, long 1st to 22 April 2026
- Benchmark: 4.50% Mar-35 Gilt (ISIN: GB00BT7J0027)
- ISIN: GB00BTXS1K06
- Bookrunners: HSBC / J.P. Morgan (DM/B&D) / Lloyds / Morgan Stanley / NatWest / UBS
- Timing: Books to close at 9:30BST
Details per market source and MNI colour
BOE: VIEW CHANGE: Santander look for no cuts through end 2026
- Santander now look for no BOE cuts between now and the end of 2026. It notes that "the change reflects a stickier inflation outlook, with CPI peaking at 4.2% this autumn, still at 4.0% at end-2025 and easing only gradually to 3% by mid-2026, leaving the Bank of England little scope to cut without undermining credibility."
- Note that Santander's previous view was already more dovish than consensus, expecting a November hold with 2x25bp cuts in February and April to a terminal 3.50%.
