EU REAL ESTATE: Property: Week in Review
Cofinimmo continued to tighten following Aedifica’s all-share takeover offer last week. COFBBB 30s were trading wide before the news and rallied sharply. Cofinimmo rejected the approach on Friday but with value established the bonds held their gains. Overall, a positive week for the sector but at 2.5bps tighter still underperformed the broader move.
• Issuance: AroundTown €750m 5yr came +5 NIC at DBR+195 with a Tender for 4 EUR bonds, 1 USD and 1 GBP expiring 13th May. Intl Workplace €300m 7yr was a sole-led deal @DBR+303, we saw this +15bps NIC. Secondary bonds widened, the new issue only rallied 3 bps. In High Yield, AccorInvest triple tranche €1.25bn came with a 5NC2 @ 5.375% and 7NC3 5.625%. Despite the lower coupon, the shorter tranche has a slightly better OAS at +308 vs +304. Existing ACCINV 31s were OAS +296 at pricing and have rallied 30c since to OAS+290.
• Earnings: Heimstaden Bostad (Small positive) 5.4% rental growth and the CEO said last year that he expected a resolution on S&P’s Neg this year; Vonovia (Small Positive) showed a strong performance in Value Add and stability in its core business; CTP NV (Neutral) 24% more leases signed yoy and 3% rent increases, will improve over time as it gets larger; Balder (Small Positive) reducing debt; Kojamo (Neutral) occupancy up but so is LTV slightly; Sagax (Neutral) stable results; Colonial (Small Positive) strong uplift in Paris, recently upgraded to Baa1.
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OPTIONS: Expiries for Apr10 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0900-10(E3.0bln), $1.0930-50(E3.0bln), $1.0960-65(E668mln)
- USD/JPY: Y143.00($1.3bln), Y145.00($744mln)
- EUR/GBP: Gbp0.8650-65(E643mln)
- AUD/USD: $0.6165(A$744mln), $0.6285($555mln), $0.6400(A$1.3bln)
- NZD/USD: $0.5600-05(N$724mln)
- USD/CAD: C$1.4395-00($1.5bln)
- USD/CNY: Cny7.3500($912mln), Cny7.4000($1.4bln)
GILTS: TD Securities Recommend Longs In 30s
TD Securities recommended longs in 30-Year gilts at 5.62%, targeting a move to 5.10%, with a stop set at 5.90%.
- They note that “rates vol. is heading to unhealthy levels, straining financial conditions. The BoE has already voiced its concern on this move. Markets should not underestimate a possible easing in the form of regulations or verbal easing or even a temporary QT freeze on this move. On every metric, 30-year Gilts are cheap: vs. U.S. Tsys & Bunds, as well as ASW and on the 5s30s curve”.
GERMANY: New Coalition Plans Making Use Of Increased Fiscal Space - Agreement
Key fiscal/economic measures announced by the incoming CDU/CSU/SPD coalition below. These broadly match the announcements seen in local media earlier today. Note that in Germany, an announcement of measures as part of a coalition agreement does not necessarily mean these will be implemented. Overall, the government seems to be planning to make use of the newly increased fiscal headroom:
- Reducing income taxes for small and medium incomes in the middle of the legislative period
- Investment "booster" in the form of amortization of equipment investment of 30% per year for the three years 2025-27
- After this has ended, decreasing the corporation tax in 5 steps by 1pp each starting January 2028 (currently standing at 15% of ~EBT but note that is not the only tax enterprises have to pay in Germany)
- Reduction of electricity taxes to the European minimum, reduce electricity network charges, abolish gas price levy, introduce a "industrial electricity price" for energy-intensive companies
- Make overtime bonuses tax-free, up to E2000/month tax-free labour work during pension, replace the "citizens income" by a "basic income" (compulsory job applications for unemployed persons and tougher sanctions)
- VAT decrease for food in restaurants by 12pp to 7% starting Jan 2026
- Increase of the minimum wage to E15/hour in 2026 (17% increase, agreement rather vague here though)
- Monetary incentives for EV purchases
- Plans to complete debt brake reform this year to "permanently enable additional investment"
Full coalition agreement pdf document available online, link here.
