EU REAL ESTATE: Castellum (CASTSS: Baa2) Moody's Upgrade

2.50% Oct-29 RAGB (ISIN: AT0000A3EPP2)

• Spread set at MS + 19bp (guidance was MS+20 Area)
• Size: Benchmark
• Books in excess of E12bln (inc E1.15bln JLM interest)

3.20% Jul-39 RAGB (ISIN: AT0000A3D3Q8)

• Spread set at MS + 66bp (guidance was MS+67 Area)
• Size: Benchmark
• Books in excess of E16bln (inc E850mln JLM interest)

3.15% Oct-53 RAGB (ISIN: AT0000A33SK7)

• Spread set at MS + 97bp (guidance was MS+98 Area)
• Size: Benchmark
• Books in excess of E18bln (inc E1.7bln JLM interest)

For all:

• Settlement: April 30, 2025 (T+5)
• Bookrunners: Barclays (B&D), Citi, DB, GS, JPM, Raiffeisen Bank
• Timing: Books to close at 10:15BST / 11:15CET

From market source

Initial market reaction to the softer-than-expected flash PMIs sees gilt futures hit fresh session highs at 92.95, adding a little over 20 ticks vs. pre-data levels, before fading back to 92.80.

• Next resistance in the contract located at 93.00, followed by a Fibonacci retracement (93.44).
• Yields 3.5bp higher to 9bp lower, twist flattening bias intact. Long end yields fail to retest early session lows.
• BoE-dated OIS covering ’25 meetings little changed to 1.5bp more dovish vs. pre-PMI levels, with ~92bp of cuts showing through year-end. Recent range extremes of ~97bp of cuts over that horizon remains untested/intact.
• SONIA futures also rally before fading a little, last -3.0 to +1.0, strip twist flattens.
• Cycle highs set earlier in April/yesterday (dependent on contract) are untested.
• Alongside the new daily highs in Gilts, EUR/GBP rallies to touch 0.8578 before fading somewhat - the 15-minute candle chart isolates 0.8587 as resistance, the downtrendline drawn off the Monday AM high.

The Eurozone-wide services PMI was 49.7 (vs 50.5 cons, 51.0 prior). While the miss was expected given the weaker-than-expected French and German data earlier this morning, the smaller deviation from consensus (compared to FR/GE) suggests the EZ ex-France and Germany was a little better than expected. 

• We estimate the German/France composite services PMI at 48.0 (vs 49.6 prior), with the ex-German/France composite at 52.7 (vs 53.3 prior).
• The manufacturing reading was 48.7 (vs 47.4 cons, 48.6 prior). We estimate the German/France composite manufacturing PMI at 48.1 (vs 48.4 prior) and the ex-German/France composite at 49.5 (vs 48.9 prior).
• The composite EZ reading was 50.1 (vs 50.2 cons 50.9 prior), the lowest since December.

Key notes from the EZ-wide release (focusing on ex-German/France comments):

• “The rest of the Eurozone continued to record solid growth of output, albeit with the pace of expansion easing slightly from that seen in March”.
• “Companies were generally reluctant to expand output given a further reduction in new orders during April”…” New export orders (which include intra-Eurozone exports) also decreased, and at a broadly similar pace to that seen for total new business”
• “April saw a sharp drop in business confidence in the euro area”…” . The drop in confidence was widespread, both in terms of sector and geographical coverage”
• “A solid reduction in manufacturing staffing levels outweighed a modest and slower increase in workforce numbers in the service sector. Continued falls in employment in the largest two Eurozone economies cancelled out job creation elsewhere”.
• “Cost inflationary pressures waned at the start of the second quarter”…” Inflation was centred on the services sector”.
• “Selling prices were raised across both monitored sectors”.