EGB OPTIONS: Bobl Call Spread

• Spread set earlier at MS+52bps (guidance was MS +54bps area)
• Size: E4bln (in line with MNI expectation)
• Books closed in excess of E23.5bln (inc E750mln JLM interest)
• Coupon: Short first coupon
• Settlement: 7 May 2025 (T+5)
• Maturity: 15 September 2035
• ISIN: FI4000587415
• Bookrunners: BNPP (DM/B&D) / Citi / CACIB / GSBE SE / Nordea
• Timing: Books to close at 10:15BST / 11:15CET

Belgium HICP inflation fell to 3.1% Y/Y in April according to the Statbel flash estimate, a 0.5pp drop from March's 3.6% and the lowest rate since January 2024. National CPI (non-HICP) inflation meanwhile also decelerated, to 2.55% from March's 2.91%.

• Sticking to the non-HICP details, core CPI (ex energy & unprocessed food) printed 2.82% Y/Y (2.71% prior), at least partially driven by services increasing to 3.96% (3.88% prior).
• Statbel points out that airfares and hotel rooms added 0.125 points to headline in April vs March - suggesting that the later timing of Easter this year had an upward impact here, something analysts expect to be observed Eurozone-wide
• "Food inflation (including alcoholic beverages) rose to 2.48% [Y/Y] this month, compared to 2.45% the previous month."
• "Energy inflation fell from 5.48% in March to 0.95% in April, contributing 0.09 percentage points to total inflation." Taking into account a 0.59pp contribution in March, energy was the main downside driver this time - as expected for the Eurozone-wide HICP print.
• For context, Belgium makes up 3.9% of the total Eurozone HICP basket in 2025.

Reuters reporting comments from REE, Spain's grid operator, says that the country's power system is "back to normal" after yesterday's mass blackouts. While the country's power network may be back and running, the issues for the gov't of PM Pedro Sanchez may just be beginning. There had been some speculation that the outages, that hit the entire Iberian peninsula as well as French regions along the border, were due to 'abnormal weather phenomena'. However, this morning the national meteorological office, Aemet, said that “During the day of 28 April, no unusual meteorological or atmospheric phenomena were detected, and nor were there sudden variations in the temperature in our network of meteorological stations,”

• REE's Eduardo Prieto says at a presser that the "preliminary assessment is that we can rule out [a] cyberattack on the power grid."
• Any sign of mismanagement by gov't agencies in relation to the blackouts could see public anger directed at the Sanchez gov't.
• Sanchez continues to govern as he has done since 2023, at the head of a left-wing minority gov't supported in an uneasy alliance by regionalist/separatist parties. Blame apportioned at the gov't could further damage his centre-left PSOE's standing (already trailing the centre-right Popular Party in polling).
• However, Spain's system of 'constructive' and 'continuist' no confidence votes (meaning a new PM must be proposed, and a successful vote does not dissolve parliament) could bolster Sanchez's chances of avoiding ouster in the immediate term while the political temperature remains high.