EU CONSUMER STAPLES: Metro AG | 2Q (to March) earnings ahead
May-15 13:23
(MEOGR 29s; NR/BBB- Neg) (now owned by Daniel Křetínský)
Reminder earnings after close - this is high beta credit.
- Revenue growth last quarter did not translate to margin expansion. When combined with unfavourable WC swing, left bleak picture for credit.
- FCF is expected to stay negative this year - co leaks sizeable cash on leases.
- Downgrade will be hoped for by some: 1.25% step on the new 30s and docs don't have a step down on return to IG - that makes it one of the most attractive docs we have seen.
- Interest payment dates are annual in early March. Pricing a downgrade before March 2026 will move current spread from Z+154 to Z+257/B+263/4.8% (i.e. just over 100bps).
The 29s should look uninteresting to anyone on RV (no step).
No firm view on 30s here - we saw value in primary but it has outperformed index by 36bps since.
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US TSY FUTURES: BLOCK: Jun'25 10Y Ultra Bond Buy
Apr-15 13:22
- +5,458 UXYM5 112-29.5, buy through 112-26 post time offer at 0905:00ET, DV01 $480,000. The 10Y ultra contract trades 112-30 last (-4).
CROSS ASSET: Initial support in Bund holds
Apr-15 13:20
- Bund made another attempt at the small support noted today at 130.75, this time printed a 130.75 low.
- Overall volumes have been on the lighter side, not seen anything above 3.5k cumulative single order type flows in Treasuries.
- US Tnotes (TYM5) has been trading in a 6 big ticks range in the past couple of hours or so, trading either side of flat.
- Looking ahead to the Cash Equity open, we are set for a circa flat open.
US: Trump Expected To Send $9.3B Rescission Package To Congress
Apr-15 13:17
President Donald Trump is preparing a rescission package that will direct Congress to undo USD$9.3 billion in funding for the State Department aid budget and public broadcasting. The package is expected to be delivered to Congress when lawmakers return from recess. Passage through Congress will require a simple majority from both chambers.
- The New York Post, which first reported on the planned request, noted the request covered roughly $1 billion for the Corporation for Public Broadcasting and more than $8 billion for USAID and other State Department efforts.
- Politico notes: "Congressional Republicans have been asking [the White House] for more a month now to send over a formal rescissions package, which would allow lawmakers to approve or reject specific funding cuts... Some GOP senators have even directly appealed to Elon Musk for the chance to codify the spending cuts he’s made through his Department of Government Efficiency initiative."
- Politico adds: "Trump sent a request in 2018 to claw back $15 billion, the Senate rejected the plan. And not all Republicans support cutting funding for all the programs Trump would target in the new request."
