EU HEALTHCARE: Healthcare: Week in Review
• Medtronic raised €1.5bn in 5yr and 20yr pricing in line with fair-value. The UOP was to repay €1.5bn due in October.
• Bayer was placed on Negative Outlook by S&P following a recent dent in earnings due to litigation charges. Whilst this was seen as a one-off, the agency noted the constraints the company is facing to fund growth.
• We looked at Danaher’s upcoming €2bn debt maturities in 2026. The company has a history of calling bonds early – in Oct 20 and Dec 21 – so we would not be surprised if there were an imminent liability management exercise.
• GSK committed to a $30bn investment in the US over the next 5 years with a focus on R&D and manufacturing. Eli Lilly had previously announced a major US investment programme and as part of that revealed plans for a $5bn plant in Virginia. This will give both companies some protection from tariffs.
• Novo Nordisk has been recovering in the equity market as the new CEO embarks on a turnaround and the company also benefitted from the release of real-world data which should Ozempic outperforming Lilly’s Trulicity by 23% for cardiovascular and stroke outcomes.
• EssilorLuxottica was upgraded to A1. This week it also launched a new range of Meta-enabled smart glasses.
• Bureau Veritas was reported to be considering the sale of its Oil & Gas business. This unit generates around 6% of total revenue. Separately, Wendel are preparing to sell another 5% of their stake which would reduce their share of BVIFP to 21.4%
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GILTS: 30-Year Yields Off Highs, Uptrend Intact
{GB} GILTS: While gilt bears managed to force the highest closing level for 30-Year yields seen in the current cycle on Monday (5.611%), they failed to challenge the intraday high registered in early April (5.659%), with the subsequent recovery leaving the benchmark at 5.55%.
- While demand for long end paper has been robust in instances of primary issuance, structural reduction in pension holdings reduce demand in the secondary market, while the UK’s ongoing fiscal fragility provides background pressure (at a minimum).
- As a result, the uptrend in play since the ’21 low remains intact, with that support line ~20bp below prevailing levels at typing.
Fig. 1: UK 30-Year Gilt Yield (%)
Source: MNI - Market News/Bloomberg Finance L.P.
STIR: SONIA/Euribor Dec '26 Spread Away From Multi-Week Highs
Dovish ’26 BoE pricing moves have pulled the SONIA/Euribor Dec ’26 (Z6) spread off yesterday’s multi-week closing highs.
- We suggested that the data wasn’t much of a gamechanger for near-term BoE meeting pricing in the immediate aftermath of the release and that seems to have played out, with the initial hawkish reaction in the front contracts countered.
- The recent run of UK data had resulted in ~18bp of spread widening since August 1, as of yesterday’s close.
- The spread is mainly being driven by the UK leg, with Euribor pricing more stagnant since the July ECB decision.
- The main development since the ECB's July decision has been the EU-U.S. trade agreement. While the agreement reduced near-term trade policy uncertainty, the level of tariffs is more onerous than assumed in the ECB's baseline scenario.
- That said, ECB President Lagarde noted this morning that the agreement is "well below" the June MPR projection severe scenario". How the agreement is incorporated into the September forecast round will be a key focus as we move forwards.
- A reminder that the ECB adopted a less dovish round of rhetoric after its most recent cut.
- Euribor futures start to price chances of a hiking cycle in H226, after leaning towards one further cut in the current cycle.
Fig. 1: SONIA/Euribor Dec’26 Spread (bp)
Source: MNI - Market News/Bloomberg Finance L.P.
STIR: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.33% (-0.01), volume: $2.760T
- Broad General Collateral Rate (BGCR): 4.31% (-0.02), volume: $1.144T
- Tri-Party General Collateral Rate (TCR): 4.31% (-0.02), volume: $1.118T
- (rate, volume levels reflect prior session)
