EM LATAM CREDIT: Grupo Energia Bogota: Potential New 10-Year Fair Value
(GEBCB; Baa3/NR/BBBneg)
IPTs 10Y: N/A
FV 10Y: T+185bp
• City of Bogota majority owned holding company for gas and electric distributors Grupo Energia Bogota proposed potentially issuing USD benchmark-sized, 144a/Reg S, 10-year notes. Use of proceeds will be to partially fund the company’s investment plan through 2027. We see a fair value of T+185bp.
• GEBCB Nov. 33s were last quoted at a G-spread of 150bps so with GEBCB 30s at a G-spread of 131bp, that would value the credit spread for a new 10-year at T+160bp, but we view that level as too tight relative to other comparable issues in the region.
• We observe the credit spread vs higher rated Chile vertically integrated electric utility Colbun (COLBUN; Baa2/BBB/BBB+) quoted at 35bp apart for 2030s and 39bp apart for COLBUN 32s vs GEBCB 33s. COLBUN 35s were quoted T+145bp which would put a new GEBCB 10-year at a fair value of T+185 Area.
• Grupo Energia Bogota has significant holdings in stable distribution businesses such as full ownership of Colombia’s largest natural gas distribution company, a 60% stake in Peru’s largest natural gas distribution company and a stake in Colombia’s largest electric distribution company among other holdings. Its Peru operations generate sufficient revenues to justify a Fitch credit rating two notches above the sovereign ceiling.
• Grupo Energia Bogota was given a Baa3 baseline credit assessment by Moody’s so its underlying credit quality is viewed as investment grade. It is also rated the same as the City of Bogota as well as the government of Colombia, so its ratings are linked to the country risk.
• Compared to the country risk of Chile (CHILE; A2/A/A-), Colombia’s risk is much higher which also signals a premium over the COLBUN curve is deserved. COLOM 10-year notes were last quoted T+290bp compared to CHILE at T+77bp.
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NORGES BANK: MNI Norges Bank Preview - Sep 2025: Another Close Call
FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK
EXECUTIVE SUMMARY:
- At the start of the month, analyst and market expectations were fairly comfortably in favour of a 25bp Norges Bank cut on September 18th. However, domestic data released over the past two weeks have made the decision a much closer call.
- We currently lean against consensus in favour of a hold at 4.25% - a risk we thought markets were underappreciating even before the recent run of domestic data.
- If rates are held on Thursday, we expect soft guidance for a 25bp cut in December.
- Whatever the rate decision, the September MPR rate path is expected to be revised higher relative to June, pointing to a higher terminal rate landing zone than the 3.00-3.25% currently implied.
- Although market pricing still tilts in favour of a cut, price action over the past two weeks has clearly been in a hawkish direction. Recent moves, alongside the split analyst consensus, opens the door to a material knee-jerk reaction under any rate decision scenario on Thursday.
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GOLD: Last Tuesday's ATH Still Intact For Gold; Spot Up 0.35% Today
A fresh extension higher for gold prices has now faded, leaving spot up 0.35% on the session at $3,655/oz after peaking at $3,664 around 30 minutes ago.
- Initial resistance remains Tuesday’s all-time high of $3,674. Clearance of this level would expose round number resistance at $3,700.
- There hasn’t been an obvious headline driver for today’s modest gold rally. Instead, we suggest that positioning ahead of the Fed’s likely 25bp rate cut on Wednesday is factoring into price action, potentially alongside well-established Fed independence concerns following US President Trump’s latest calls for lower rates.
- A reminder that the US Senate will hold a cloture vote on Stephen Miran's Fed Board nomination at around 17:30 ET / 22:30 BST, with a full confirmation vote likely to take place at roughly 20:00 ET / 01:00 BST. Despite some reservations from institutionalist Senate Republicans, there is not expected to be any GOP opposition.
- Separately, we note that considerations around a physical gold trading tax in Thailand (due to domestic FX concerns) has not had a material impact on spot prices today.
