EU HEALTHCARE: Healthcare: Week in Review
Trump’s latest tariff announcement came late on Friday so may not be factored into spreads at time of writing. A stable week up until the 50% tariff announcement. Spreads less than 1bp wider on average. Eurofins was the weakest name +6.5bps wider but that was after an 80bps move in from April wides (ERFFP 0.875 31).
- Novo Nordisk was upgraded to AA. S&P said the leverage could be 0x by 2027. This coincided with the CEO’s ousting and the FT wondering if the company was a “one-hit-wonder” with a single blockbuster drug; the equity is 57% off the high. NOVOB brought a 5-tranche €6bn deal. We felt that the 8yr and 12yr came 5bps wide to FV. In secondary 8yr was unchanged and 12yr -2 tighter. UOP included refinancing debt (Catalent’s 3 manufacturing sites cos t$16.5bn).
- H Lundbeck made a rare visit with a €500m deal to fund the Longboard acquisition. The company paid down debt quickly after the Alder purchase in 2019. We thought that the 4yr came +5bps wide to FV. Bonds tightened 3bps in secondary. On Friday, Kepler initiated equity coverage with a “Buy” and DKK60 price target on late-stage pipeline strength.
- Pfizer’s multi-tranche from last week continues to do well with 12yr and 19yr around 7bps inside re-offer. The company announced an up-to-$6bn deal with Chinese 3SBio Inc to gain access to a new cancer treatment. It also received a boost from the FDA who stepped back from a worst-case scenario regarding COVID vaccination of children and opted for an evidence-based approach.
- Medtronic scaled back its EPS forecasts which hurt the stock, but results were OK from a credit perspective. The company plans to spin-off its Diabetes unit (<8% of sales). MDT and ZBH have significantly underperformed BSX and SYK over the past 3-4 years. There may be reasons for caution on the name if management feel pressured into M&A action.
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PIPELINE: Corporate Bond Roundup: Walmart 4Pt on Tap
The last time Walmart issued debt was on Sep 6, 2022, total $5B: $1.75B 3Y +35, $1B 5Y +55, $1.25B 10Y +85, $1B 30Y +100. Walmart is also in the list of top 20 record issuance amounts with $16B over several tranches on June 20, 2018.
- Date $MM Issuer (Priced *, Launch #)
- 04/23 $Benchmark Walmart 2Y +45a, 2Y SOFR, 5Y +60a, 10Y +80a
- 04/23 $Benchmark OCP 5Y +265a, +10Y +290a
- 04/23 $Benchmark Hanwa Futureproof 3Y +130a
- $5.7B Priced Tuesday, $10.7B/wk
MONTH-END EXTENSIONS: CIBC See No Meaningful Adjustments In CAD Indices
CIBC note that “modified durations will remain basically unchanged across the FTSE Canada Universe Bond Inde on May 1 with no bonds rolling out or moving down maturity buckets on that day. At the same time, payment of approximately C$883mm in May 1 coupons will also have minimal contribution to the extension in the Universe Index”.
US: MNI POLITICAL RISK - Trump Softens Tone On China And Fed
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- Treasury Secretary Scott Bessent will deliver a keynote address at the Institute of International Finance to share his “thoughts on the state of the global financial system” at 10:00 ET 15:00 BST. Bessent yesterday led a major tone shift from the administration. His private comments at an investor event foreshadowed a dovish pivot from President Donald Trump on China and Fed Chair Jerome Powell.
- The White House is reportedly closing in on general agreements with Japan and India that fall short of comprehensive trade deals but could be touted as progress toward realising Trump's agenda.
- Trump suggested yesterday that a trade deal with China could be on the horizon. He also hinted that Beijing has more to gain than Washington from a deal, indicating that a standoff over initiating high-level talks continues.
- On China’s tariff rate, Trump said: “145 percent is very high, and it won't be that high… It'll come down substantially, but it won't be zero.”
- Ukraine peace talks in London get underway today without Secretary of State Marco Rubio or negotiator Steven Witkoff. The prospect of a breakthrough today appears remote after Ukrainian President Volodymyr Zelenskyy rejected a central pillar of the US ceasefire proposal.
- Iran's Foreign Minister said indirect nuclear talks with the US are on the “right track”.
- Poll of the Day: Large majorities of US adults support courts and Congress checking presidential power.
Full Article: US DAILY BRIEF
