EU FINANCIALS: Consortium led by Allianz Buys Veridium

• Size: E2bln WNG
• Books closed in excess of E8.5bln (ex JLM interest)
• Spread set earlier at MS+42bps (guidance was MS+45 area)
• HR 98% vs 2.50% Feb-35 Bund
• Maturity: 26 February 2035
• Coupon: Long first
• Settlement: 24 February, 2025 (T+5)
• ISIN: EU000A1Z99W5
• Bookrunners: BofA (DM/B&D), DB, Santander
• Timing: Hedge deacline 12:10GMT / 13:10CET

From market source

• Volatile JPY swings in recent weeks will have added difficulty in holding high conviction directional plays in the crosses. Despite this, bullish indicators for the Japanese yen remain prominent, and notably EURJPY’s technical resistance at the 50-day EMA has remained intact.
• The recent relief rally for the cross has allowed an oversold trend condition to unwind, and we remain -2.3% in 2025. Renewed weakness would refocus attention on 155.61, the Feb 10 low and bear trigger. Below here, the August and September lows from last year also mark important medium-term parameters, at 154.41 and 155.15 respectively.
• Bearish sentiment has been conveyed from analysts, where we recall SocGen favouring EURJPY shorts, describing the deterioration in Eurozone growth expectations relative to Japan as striking. Furthermore, we highlighted that TD Securities have recommended a short at 160.00, targeting a move to 152.95. Their short-term valuations suggest EUR/JPY trades rich, their models indicate positioning is clean and TD see BoJ and ECB outlooks as favouring the JPY, with March and May BoJ meetings being live.
• This week’s Eurozone calendar is headlined by the February flash PMIs (Friday), where uncertainty around the upcoming German election (Feb 23) may have an impact this month. A number of analysts have flagged the risk of post-covid residual seasonality inflating the PMIs in Q1 2025. As such, it may be important to not overreact to soft signals that a Eurozone cyclical recovery is firmly underway.

ERZ5 98.25/9850cs, bought for 5.5 in 5k.