EU REAL ESTATE: HOWOGE (A/AA-) Tap of 30s
• IPT: Exp €200m 3.875 2030 Tap ms+145a
• FV: ms+110a. The existing is screening +111. This gives an opportunity to buy meaningful size unlike the secondary market of a small deal.
• Note: HOWOGE is NOT in the LECPTREU index (Euro Agg Corp). It does sit in LEGATRUU, LBEATREU, LP06TRUE
• The 30s are screening wide to Vonovia. When the deal reaches €500m there may be more liquidity in that line. The 28s and 33s trade inside Vonovia.
• Owned by State of Berlin. €13bn GAV Landlord with 77k Residential Units.
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STIR: SFRM5 Blocked
Latest block trade lodged at 08:47:06 London/03:47:06 NY:
- SFRM5 1K lots blocked at 95.885, looks like a seller.
SWAPS: German ASWs A Little Narrower As Bonds Struggle
The weakness in outright bonds/uptick in European equities leaves German ASWs narrower early this week.
- Spreads vs. 3-month Euribor are 0.2-0.9bp narrower on the day, with Schatz leading the narrowing.
- However, the Schatz spread has failed to breach Friday’s low, while longer dated variants have traded through their respective Friday lows.
- Zooming out, a slightly more conducive risk tone has started to counter the widening theme seen in the second half of March/early April.
- A reminder that early March saw fresh cycle lows for long-dated spreads, following the German “whatever it takes” fiscal moment.
- That was before a lack of an immediate ramp up in issuance and the well-documented increase in global trade/U.S. policy uncertainty weighed on wider risk sentiment, helping drag ASWs away from lows.
- The impending, meaningful uptick in German issuance should continue to play into long end ASW spread dynamics over the medium-term (it should move back to the fore in H225/H126), although positioning and swings in broader risk appetite need to be accounted for as well.
SNB: Tweak to Threshold Factor is Neutral for MonPol Stance
SNB adjusts the remuneration of sight deposits, lowering the threshold factor from 20 to 18, effective as of 1st June 2025.
- This is considered neutral for monetary policy purposes, as it offsets increases to minimum reserve requirements.
Full SNB release here.
- What this effectively means is that more sight deposits are remunerated at a discount to the the SNB policy rate (rather than at the policy rate).
- The SNB is conducting this move in order to ensure monpol remains effective and the transmission mechanism isn't hampered by minimum reserve requirements rising (which they're expected to continue to do over the coming three years).
- The move follows recent previous adjustments to reduce the threshold factor that were implemented in October 2024 and February 2025.
- As such, no notable response in EUR/CHF, still below the overnight high of 0.9438.
