EU TRANSPORTATION: Heathrow 11Y Guidance (x2)
(HTROW; Class A Opco; NR/BBB+/A-) (private)
Weak pricing is not characteristic of airport/regulated infra assets. Sentiment looks specific to Heathrow and may be weighed down by recent tariff decisions. The tariffs are capped by the regulator and have come down from £31.57/passenger to a now £25.34 in 2025 and £25.28 in 2026. This year tariffs are £26.74.
For S&P it is holding at top-level of rating thresholds (i.e. has headroom to ride the tariff headwinds). Note re. the higher than peers 2/3 exposure to passenger revenues (vs. exposure to concession fees collected from retailers in the airport, real-estate, parking - and in its case - Heathrow express train line) - the expected revenue from those other streams is still captured in the regulators calculations when setting the cap - but after the fact are not directly capped. I.e. higher exposure to non-airfare revenue increases beta of revenue on passenger growth.
Re. passenger numbers and control on costs, 9m to Sept traffic was +6% and it was guiding to +5.8% to end the year. Operating cost are inflating +7% and alongside lower revenues on above cap changes is driving adj. EBIT down -10% YTD - margin contracting 3ppt to 39%.
We still see 10bp NIC but highlighting some potential concerns from market.
https://www.caa.co.uk/newsroom/news/regulator-decides-on-changes-to-heathrow-airport-limited-s-airline-charges-in-response-to-cma-appeal/#:~:text=These%20changes%20will%20lead%20to,and%20%C2%A323.71%20in%202026.
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GILT PAOF RESULTS: The PAOF for the 0.75% Nov-33 linker was not taken up.
- GBP375.0mln hasd been available.
- This leaves GBP18.110bln in issue.
SNB: MNI SNB Preview - December 2024: Further Easing Coming
EXECUTIVE SUMMARY:
- The SNB is expected to cut its policy rate again, with a regular 25bps cut to 0.75% appearing the most likely outcome but an outsized 50bps move also remains possible. Market pricing between the two remains finely split
- There will therefore likely be a downward revision to September’s updated inflation projection, regardless of it being conditional on any new policy rate
- Focus should be on any change to FX communications – although while CHF has been volatile, the currency overall stands at similar real levels to September
- As in that last meeting, the SNB has unusually clearly hinted at further easing to come, so attention will also be on any commentary towards potentially negative terminal rates in President Schlegel’s first press conference
FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: https://media.marketnews.com/SNB_Preview_2024_12_b18314e27e.pdf
OUTLOOK: Price Signal Summary - Pullback In Gilts Extends
- In the FI space, a bull cycle in Bund futures remains intact and the latest pullback is considered corrective. A move down is allowing an overbought trend condition to unwind. For bulls, price has recently traded through 136.37, the 76.4% retracement of the Oct 1 - Nov 6 bear leg. A clear break of this level strengthens a bullish theme and opens 137.72, the Oct 1 high. Initial firm support lies at 135.41, the 20-day EMA.
- Gilt futures are trading lower today and this has resulted in a move through initial support at 95.49, the Dec 4 low. The next level to watch is 95.17, the Nov 28 low and today’s intraday low, so far. A continuation down would expose key support at 93.40, the Nov 18 low. A breach of this support would be a bearish development and highlight a reversal. Key resistance and the bull trigger is 96.54, the Dec 3 high.
