EU FINANCIALS: BNP - New Issue - € B'mark Tier 2 10.5NC5.5 - FV
BNP - New Issue - € B'mark Tier 2 10.5NC5.5 - FV
- IPT: MS+205
- FV: MS+173 - Linear extrapolation from the BNP 0.875 2033 and BNP 4.159 2034, also the shape of the BNP one time call Tier 2 curve. The BNP 0.875% has an anytime call, but given the call incentives in the tier 2 market should still trade in line.
- Exp. Ratings: Baa2/BBB+/A-
Looking more broadly, other French Tier 2 curves arguably look steep vs BNP, especially past the 5y point. Comparing to the new issue the ACAFP 4.375 2036 and the BPCE 4.81 & 4.875 bonds will look like compelling value. Especially if one considers where the ISPIM 4.271 2036 or the BAMIIM 4.5% 2036 , which are HY, trades.
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NOK: Post Data NOKSEK Rally Extends
Although NOKSEK saw a contained initial reaction to this morning’s Norwegian CPI and Swedish activity data, the cross has continued to rally through the morning, now +0.4% today at ~0.9850.
- The cross will need to consolidate above the 20-day EMA at 0.9858 to signal scope for a renewed push towards parity. Meanwhile, the prior breakout level at 0.9760 (Oct 7 high) remains the key support.
- The reaction in NOKSEK has been mostly NOK-driven, with the firmer-than-expected inflation print dampening expectations for a surprise rate cut in December. However, the Q4 Regional Network Survey on Thursday remains a key focus.
- Taken alongside the dovish shift in the RBA’s policy statement overnight, AUDNOK is down 0.9% and has tested trendline support drawn from the 2022 low. A clear breach of this trendline with expose the medium-term pivot level around 7.0000.
FOREX: FX Exchange traded Roll update
FX Exchange traded Rolls dominate today, with some desks favouring rolling earlier, given the calmer Markets and ahead of CPI and ECB.
Well over half the front Month volume in the EUR is spread related, but seeing similar jumps in the pace across the board.
Roll pace (expiry Monday).
- EUR: 20% (below pace).
- GBP: 27% (slightly above pace).
- JPY: 33% (above pace).
- CHF: 28% (above pace).
- CAD: 22% (within pace).
- AUD: 23% (within pace).
- NZD: 25% (above pace).
- SEK: 32% (above pace).
- NOK: 32% (above pace).
UK: Renewables To Overtake Fossil Fuels in UK Gen Mix in 2024
Renewable generation – wind, solar, hydropower - this year in the UK is forecast to reach 103TWh, or 37% of the power mix, overtaking fossil fuels for the first time, Ember said in a report.
- Fossil-fuel generation is seen at 97TWh, or 35% of the generation mix, in 2024.
- UK gas power generation is set to decline by 13% year on year, or 13TWh, in 2024 – the lowest level since 1996.
- Wind power generation in the UK is forecast to rise by 1.5% on the year to a share of 29%, or 82TWh in 2024. The increase in wind output is largely due to increased generation from onshore wind due to increased capacity of 590MW, with a further 78MW targeting completion by the end of the year.
- UK power demand is tracking similar levels seen in 2023 (25.87TWh), with demand in the first eleven months of the 2024 1% higher year on year.
