EU FINANCIALS: FINANCIALS: UCGIM: Bidding For Luminor, Small Enough Not To Hit Spreads
Unicredit (UCGIM: Baa3/BBB-/BBB-) reportedly bidding for Blackstone’s Estonian bank, Luminor, in competition with Hungary’s OTP. Deal is “on strategy” and small enough such that it shouldn’t impact spreads meaningfully, in our view.
- BBG is reporting the bids which are part of a sale process started earlier this year. Blackstone “seeking” 1.2x book value, reportedly, which, against EUR1.8bn of equity would be a little over EUR2bn. This is only c.3-4% of UCGIM’s market cap.
- Unicredit CEO Orcel has been clear that he’ll continue to look for bolt-on acquisitions to complement the bank’s already-strong CEE franchise footprint. This is, therefore, “on message” but, with UCGIM’s equity still trading at a discount to book value (c.10% on 2024E consensus), this would be marginally dilutive. The good news is that it’s relatively small and fits with the strategy.
- Unicredit’s spreads have marginally underperformed the peer group, being 16bp wider over the last month and -29bp YTD (€IG banks: +13bp, -35bp). This deal shouldn’t do much to alter that position, in our view.
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Historical bullets
JGB TECHS: (M4) Just Above Key Support
- RES 3: 148.74 - High Jul 24
- RES 2: 147.74 - High Jan 15 and bull trigger
- RES 1: 145.95 - High Mar 25 1
- PRICE: 143.64 @ 16:17 BST May 24
- SUP 1: 143.47 - Low May 22
- SUP 2: 143.44 - Low Oct 31 (cont) and the bear trigger
- SUP 3: 141.65 - 1.00 proj of Mar 22 - Nov 1 ‘23 - Jan 15 price swing
A bear trend in JGB futures persists, erasing the corrective bounce in recent weeks. The contract for now is trading just above key support and bear trigger at 143.44, the Nov 1 low. A stronger reversal higher is required to signal the end of the recent downward phase. Key resistance is at 145.95, the Mar 28 high. A break would signal scope for a climb towards the bull trigger at 147.74, the mid-January high.
USDCAD TECHS: Continues To Find Support
- RES 4: 1.3977 High Oct 13 ‘23 and a key M/T resistance
- RES 3: 1.3899 High Nov 1 and a key resistance
- RES 2: 1.3846/55 High Apr 16 and the bull trigger / High Nov 10 2023
- RES 1: 1.3748/85 61.8% of the Apr 16 - Mar 16 bear leg / High Apr 30
- PRICE: 1.3733 @ 16:53 BST May 24
- SUP 1: 1.3669/1.3590 20-day EMA / Low May 16 and the bear trigger
- SUP 2: 1.3547 Low Apr 9
- SUP 3: 1.3512 50.0% retracement of the Dec 27 - Apr 16 bull cycle
- SUP 4: 1.3478 Low Apr 4
USDCAD erased the Thursday gains into the close, however the bullish trend condition remains intact above the 1.669 20-day EMA and 1.3590 bull trigger. Recently, key supports at 1.3642, the 50-day EMA, and 1.3610, the May 3 low, have been pierced. But a clear break of both levels is needed to threaten the bullish theme and instead signal scope for a deeper retracement. For bulls, a stronger resumption of gains would refocus attention on the bull trigger at 1.3846, the Apr 16 high.
AUDUSD TECHS: Corrective Pullback Extends
- RES 4: 0.6771 High Jan 3
- RES 3: 0.6751 76.4% retracement of the Dec 28 - Apr 19 bear leg
- RES 2: 0.6729 High Jan 12
- RES 1: 0.6714 High May 16 and the bull trigger
- PRICE: 0.6626 @ 16:50 BST May 24
- SUP 1: 0.6592 Low May 24
- SUP 2: 0.6576 50-day EMA
- SUP 3: 0.6465/6407 Low May 1 / Low Apr 22
- SUP 4: 0.6363 Low Apr 19 and the bear trigger
AUDUSD traded lower this week. The latest pullback appears to be a correction and a bullish condition remains intact following recent gains. The pair has recently breached a key short-term hurdle at 0.6668, the Mar 8 high. The break strengthens a bullish theme and a resumption of gains would open 0.6751, a Fibonacci retracement. On the downside, support to watch lies at 0.6576, the 50-day EMA.
