EU REAL ESTATE: Property: Week in Review
May-16 13:49
A strong week with spreads 5.5bps tighter on average. 6 more companies reported earnings which were generally steady. Cofinimmo presented a detailed report on the Aedifica offer. They accepted the rationale of the offer but said that 1.16x was too low; 1.21x would be fair. It seems that the merger is now only a question of price.
- Issuance: Equinix €1.5bn dual Green 4yr & 9yr priced +2/+5 wide to our FV and rallied -9/-7bps. DVIVER Deutsche Vermoegens brought a rare €350m 5yr +10 wide to FV which rallied -12bps. ICADE extended their profile with a 10yr €500m in conjunction with a tender of 2025-28 bonds. The new issue rallied -3bps having come +2 cheap. Shurgard has mandated its second Eurobond, also a 10yr. In other markets, Vonovia issued €1.3bn in Convertibles and Heimstaden Bostad borrowed SEK 500m.
- Earnings: CityCon slightly reduced its guidance but did say that it was considering a 100m tender of the 27s which moved 35bps tighter on the week. TAG Immo had stable results for the Rental segment but Polish development was below expectations. LEG, Nepi, Merlin and Grand City all reported stable earnings.
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BOC HOLDS KEY RATE AT 2.75%; LESS FORWARD LOOKING AMID TARIFFS
Apr-16 13:45
- BOC HOLDS KEY RATE AT 2.75%; LESS FORWARD LOOKING AMID TARIFFS
- BOC SAYS OFFICIALS WILL PROCEED CAREFULLY AMID COMPETING RISKS
- BOC CAN ACT DECISIVELY IF RISKS SHIFT CLEARLY IN ONE DIRECTION
- BOC SAYS MUST KEEP INFLATION STABLE, WILL AIM TO AID GROWTH
- BOC SAYS A LONG GLOBAL TRADE WAR CAN TRIGGER CANADA RECESSION
BOC: Instant Answers For BOC Rate Decision
Apr-16 13:45
Following are the Instant Answers for the Bank of Canada interest-rate decision:
- Overnight Rate Target (2.75%, unchanged)
- Does the Bank signal it is prepared to LOWER rates in the future? Yes
- Does the Bank signal it is prepared to RAISE rates in the future? Yes
- Does the Bank signal it intends to leave rates on hold until the outlook is clearer? Not answered
BOC: Holds Rate At 2.75%, Cautious And Less Forward Looking Amid Trade War
Apr-16 13:45
- Bank of Canada holds benchmark interest rate at 2.75% after seven prior consecutive cuts.
- "Governing Council will proceed carefully, with particular attention to the risks. That means being less forward-looking than usual until the situation is clearer. It also means we are prepared to act decisively if incoming information points clearly in one direction."
- "We will pay close attention to the risks and uncertainties to the Canadian economy and inflation. These include: the extent to which higher tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve," Governor Macklem said.
- BOC says it must maintain price stability while aiding economic growth.
- BOC says short-term inflation expectations have moved higher.
- Central bank modeled two scenarios: Limited tariffs and uncertainty, new tariffs are negotiated away; and prolonged trade war where Canada Q2 GDP contracts and economy falls into recession for a year.
- In milder scenario inflation +1.8% in 2025, below BOC's 2% target (Jan forecast +2.3%) and 2% in 2026. Deceleration partly attributed to the end of consumer carbon tax. GDP growth seen stalling in Q2.
- In worse scenario CPI +2.7% in 2026 (prior 2.1%). BOC forecasts GDP -1.3% in Q2 2025 at annualized pace. For the full year 2025 GDP slows to +0.8% (Jan projection +1.8%). For 2026 GDP is -0.2% (prior +1.8%).
- The Bank said the partial U.S. tariff relief announced April 9 "moved trade policy back towards the middle of the two scenarios."
