EU TRANSPORTATION: bpost | 1Q results
(NR/A-/NR)
(Standalone NR/BBB-), 3+ uplift for 51% Belgian State (AA) ownership
Trades at a market cap of €0.3b vs. net debt of €1.8b. Back in 2017, it had a market cap of over €5b, was generating less revenue, and carried barely any net debt. This has become more the norm than the exception among postal operators — parcels and logistics, once expected to offset mail declines, have struggled in a competitive market dominated by larger-scale players. The solution for bpost is unclear. Some may argue it needs to be in private hands, but that would not be credit positive in the short term. On levels, it screens tight to us: the 29s trade well inside step-protected IDSLN 28s, and the 34s trade flat to FedEx 33s (unconsented) and well inside the consented.
- 1Q revenue at €1.1b was +12.7% but excluding acquired Staci it was down -7%
- adj. EBIT at €42m (-40%) and that includes +€13m from Staci. Removing that it was down -60%
- margin 3.7% down -330bps y/y despite Staci being margin accretive
- FCF at €150m (€258m LY) - 1Q is favourable due to WC swing (+€45m)
- financing cash flows excluded in that that was -€60m up from -€34m, on higher lease payments & interest costs
- Domestic delivery operations (~1/2 the group) saw volume pressure: mail -7.5%, parcels -2%
- says parcel was up +2.5% in Jan/March but impacted by two week strike in Feb
- It is carrying €2.6b/€1.8b of g/n debt up circa +€1.5b - as expected on Staci acquisition
- Based on guidance we see leverage coming in at g/n 5x/mid-3x.
The company said 1Q was in line with expectations and reaffirmed full-year EBIT guidance of €150–180m (-20–33% y/y) - that fall despite having Staci this year.
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US TSYS: Bessent Unconcerned About Tsy Yield Moves, Eyes SLR Reform
Tsy Sec Bessent got into hedge fund manager mode in his interview on Fox Business - he doesn't sound concerned about what's going on in yields, saying (paraphrasing):
- There's one of those "deleveraging convulsions" going on right now in markets - it's large leveraged players experiencing losses having to deleverage. Don't think anything systemic about this.
A quick note on mention of SLR for those who aren't following: potential for reforming the Supplementary Leverage Ratio rule for large banks was what led to the widening in swap spreads earlier this year. And part of the collapse in swap spreads (ie moving well below Tsy yields - 10Y spread is in the chart below) in the last week has been seen as in part a continuation of the unwind of this trade, among other potential factors including market participants selling Treasuries to raise liquidity.
As Bessent suggested in his Fox Business interview, deregulation could help open up room on US bank balance sheets to hold Treasuries.
- The Trump administration is firmly behind these reforms. Recall that, in somewhat excellent timing, Fed Governor Bowman has a Senate nomination hearing to be appointed Vice Chair for regulation at the Fed on Thursday - she sparked the widening in swap spreads when she said in early Feb that "where we can take proactive regulatory measures to ensure that primary dealers have adequate balance sheet capacity to intermediate Treasury markets, we should do so. This could include amending the leverage ratio and G-SIB surcharge regulations for the largest U.S. banks."
Bessent says he will discuss the topic at an American Bankers Association event that starts at 0830ET - the ABA is livestreaming on X.com here:
US TSY FUTURES: BLOCK: Jun'25 5s30s Steepener
Steepener Block posted at 0823:50ET:
- +10,800 FVM5 107-29, post time bid vs.
- -4,060 USM5 112-26, well through 112-30 post time bid.
US: MNI POLITICAL RISK - Trump's Trade War Spirals
Download Full Report Here
- The latest tranche of President Donald Trump's tariffs went into effect today, including a punitive tariff hiking duties on Chinese imports to at least 104%. In response, China announced it will raise its tariff on US imports from 34% to 84%, with the measure set to take effect within hours. There is more to come, with Trump promising yesterday a “major” tariff on pharmaceuticals would be announced “very shortly.”
- The prevailing view amongst analysts is that the Trump administration is signalling a willingness to negotiate deals but it is unclear how quickly talks can proceed or what kind of deals could be on the table.
- Treasury Secretary Scott Bessent told Fox Business this morning that a Vietnamese delegation is in Washington today for tariff talks. Polymarket views Japan as the most likely country to see a tariff deal.
- White House Press Secretary Karoline Leavitt confirmed that Italian Prime Minister Giorgia Meloni will become the first European leader to meet face-to-face with Trump since the imposition of tariffs.
- The EU is working on retaliatory measures that will target Republican states.
- USTR Jamieson Greer will testify again on the Trump administration’s trade policy.
- Trump ratcheted-up pressure on rebellious House Republicans to back a Senate-approved budget blueprint. Speaker Johnson has teed up a Rules hearing today towards bringing the budget to the floor.
- Poll of the Day: Roughly 50% of Americans say short-term economic pain is worth it.
Full Article: US DAILY BRIEF
