EM CEEMEA CREDIT: Electrica: FV for €500mnWNG 5Y Green deal
Societatea Energetica Electrica - FV for €500mnWNG 5Y Green deal
(ELRO; NR/NR/BBB-)
IPT @ MS+280/290bp
FV @ MS+240bp
- We sketch our FV considerations at z+240bp. Based on the terms of the proposed deal, we see FV just inside the interpolated sovereign curve. To gain some perspective vs the sovereign curve, we look at spread moves since pre-election results on 16 May, we note how the sovereign curve is some 130bp tighter over the period (see chart below).
- Among comparables, we look at Romgaz 29s charting at z+220bp area, Bulgaria’s Bulgarian Energy Hld 30s charging at z+215bp area as well as EPEN 29s and 32s charting at z+185bp and z+205bp area, respectively.
- For reference, we also look at MVM Energetika’s 31s and CZGRID 29s and 31s.
- For context, Co.’s total EBITDA was RON1.3bn in 2024, driven mainly by distribution. EBITDA in Supply was negative, due to pricing. Fitch expects EBITDA in 2025 to reach RON1.5bn as the supply business normalises.
- The Co. has govt ownership with a 49.8% stake. Fitch does not expect state support in case of stress, citing “porous” legal ringfencing and access and control.
Historically, the Co.’s debt has been ST, around 80% of total debt in FY23, reducing to 60% at YE24 and further reduction to below 50% expected in the near term. Key rating credit ratio from Fitch’s perspective is FFO net leverage, which is expected to remain around 4x.
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JGB TECHS: (M5) Rallies Off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.19 @ 15:53 GMT Jun 06
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: June 2025
We've just published our UST Issuance Deep Dive - Download Full Report Here
- May’s refunding round saw guidance as well as coupon sizes for the current quarter unchanged.
- The August round (Jul 28-30) could prove more compelling, reflecting both pressure at the long end of the Treasury curve as well as a shifting fiscal outlook amid tariff revenues contrasted with impending tax cuts (not to mention the likelihood of approaching the debt limit at around that time if it’s not lifted).
- Future Coupon Upsizing: We’ve seen some expectations that Treasury could lean against some of those trends in the August refunding, with potential signals if not immediate action on adjusting buybacks or even reducing issuance duration in order to reduce pressure on the long end. MNI’s current expectation is that coupon sizes will only be increased in early 2026. We will update in our next Deep Dive at end-June, with our full refunding preview coming in late July.
- Upcoming issuance: June is set to see $315B in nominal Treasury coupon sales, in addition to $23B in 10Y TIPS and $28B FRN for a total of $366B. Sales for the month start in the coming week, on Tuesday June 10 with $58B of 3Y Note, Wednesday June 11 with $39B of 10Y Note, and Thursday June 12 with $22B of 30Y Bond.
- May Auction Results: Against a backdrop of continued steepening pressure for global sovereign curves, May’s coupon auctions saw strong sales at the short-end/belly contrasted with tails at the long-end.
US FISCAL: Extraordinary Treasury Measures Tick Up As Cash Depletes
Treasury had $84B in "extraordinary measures" available to keep the government financed as of June 4 per a release Friday. That is up from $68B a week earlier though Treasury has exhausted three-quarters of the total initially available ($362B) when the debt limit impasse began in January.
- Combined with a pullback in Treasury cash ($376B), the total resources available to avert an "x-date" in the summer are down to a total $460B, the lowest since April 10 before the annual tax take accelerated.
- There will be another uptick in Treasury cash late next week/early the following week around the mid-June tax date, but this is likely to be the last major uplift before the summer at which point x-date speculation will pick up if Congress hasn't passed a debt limit increase by then.
