EU UTILITIES: Engie: 3Q25 Results
(ENGIFP; Baa1/BBB+/BBB+)
Credit neutral.
- Revenue down 2% YoY, unchanged YTD with 2% organic growth.
- Adj. EBITDA down 7% YoY, close to YTD trend with lower electricity prices and hydro volumes.
- YTD FCF €5.8bn, up €0.9bn YoY on lower net capex which includes asset sales. Some investment decisions were also delayed.
- Reported net leverage little changed sequentially at 3.2x.
- FY adj. net income guided to the upper half of the range, effectively a 3% midpoint upgrade.
- Belgian nuclear plants have been restarted ahead of schedule with liability payments complete.
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FRANCE: RN Declines To Participate In Talks w/Lecornu
The far-right Rassemblement National (National Rally, RN) will not participate in talks with outgoing PM Sebastien Lecornu, according to party president Jordan Bardella and RN leader in the National Assembly Marine Le Pen. Both reiterate the party's call for the dissolution of parliament and snap legislative elections.
- Lecornu has so far held meetings with leaders of centrist parties that have supported previous gov'ts, as well as the leaders of both the National Assembly and the Senate. A gov't presser published after the meeting, Lecornu said there are "two priorities that are essential to the entire political class: the adoption of a budget for the State and for Social Security and the future of New Caledonia."
- Meetings with other political factions are set to continue through the afternoon and into the morning of 8 October.
- One development of note that has garnered few headlines, given the political crisis, has been in the parliamentary by-election in Tarn-et-Garonne on 12 Oct. In the run-off, a candidate from the centre-left Socialist Party faces off against one from Eric Ciotti's right-wing Union of the Right for the Republic (UDR), which often aligns with the RN. Bruno Retailleau, leader of the conservative Les Republicains (LR), has called on voters not to side with the left, tacitly endorsing the UDR candidate.
- The LR has sat in gov't with centrist parties over the past several years, but Retailleau's unofficial endorsement of a UDR figure has led to speculation the party may be open to working with the RN in the future.
GILTS: Basis Trade
Gilt Basis trade, suggest Cash seller (unconfirmed):
- G Z5 2.44k at 90.41.
FRANCE: Little Reaction In OAT Markets To Latest RN Headlines
"FRENCH FAR-RIGHT PARTY NATIONAL RALLY'S JORDAN BARDELLA AND MARINE LE PEN HAVE DECLINED PM LECORNU'S INVITATION TO TAKE PART IN TALKS -RN PARTY" - Reuters
"FRENCH FAR-RIGHT NATIONAL RALLY'S BARDELLA AND MARINE LE PEN REITERATE THEIR DEMANDS FOR DISSOLUTION OF PARLIAMENT" - Reuters
No real reaction in OAT futures or the 10-year OAT/Bund spread to those headlines – it’s not surprising to see a lack of support from the right for Lecornu’s last-minute budget talks.
- 10-year OAT/Bund spread remains around 85bps, up from ~82bps before Lecornu’s resignation and a knee-jerk high of over 88bps yesterday.
- OAT futures -19 ticks at 120.91, the middle of today’s range.
- Our Political Risk team noted earlier that Former Prime Minister Edouard Philippe has publicly called for presidential elections to be brought forward from mid-2027. Philippe's intervention is a notable one. Opposition figures have frequently called for President Emmanuel Macron to stand down and call a snap election. However, Philippe not only hails from the centrist bloc of parties that supports the gov't, but also served as Macron's first prime minister on coming to office in 2017.
