EU COMMUNICATIONS: Rating Agencies Voice Views On Omnicom-IPG Deal
OMC: Baa1/BBB+ IPG: Baa2/BBB/BBB+
Broadly positive views of the deal on the enhanced scale and operational efficiencies with liquidity to remain robust on IPG’s lower leverage and cash reserves. Integration risks are noted though viewed as manageable. Omnicom’s longest-dated EUR 32s are +5bp since Friday’s close though the other lines have been muted
- Moody’s: Affirmed Omnicom at Baa1 and left on stable; post-deal leverage of 2.4x (from 3.1x) and FCF-to-Debt of ~10% set against upside/downside thresholds of 2.5x/3x and >15%/<10%. IPG on review for upgrade should their debt remains outstanding and be guaranteed by Omnicom.
- S&P: No rating action for Omnicom though a published bulletin notes improved scale and synergies; IPG moved CreditWatch Positive with the issuer rating expected to be withdrawn on closing. Post-deal leverage seen well below Omnicom’s 2.5x downside threshold (Omnicom was 2x at 9M24 which is seasonally high).
- Fitch: Affirmed IPG. Combined leverage of 2.1x as of Sept from Omnicom’s 2.5x and IPG’s 2.1x. Assumes IPG debt will be pari passu to Omnicom’s post-closing.
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STIR: GBP STIRs Continue To Point To Shallow BoE Cutting Cycle
GBP STIRs continue to point to a much shallower BoE cutting cycle post-Budget, despite BoE Governor Bailey playing down the spill over of the fiscal announcements.
- 4bp of cuts showing for next month 31.5bp of easing seen through March, 53bp priced through June and 71bp of cuts priced through December ’25.
- SONIA futures a little firmer this morning, aided by the rally in Bunds, last flat to +3.5.
- Goldman Sachs have recommended an SFIZ4/Z5 flattener, citing their BoE outlook, meaningful repricing of Fed expectations limiting chances of hawkish spill over moving forwards and current elevated BoE terminal rate pricing.
- Tomorrow’s labour market readings headline the UK data calendar this week.
- Elsewhere, we will hear from BoE Governor Bailey (Thursday, along with an appearance from Chancellor Reeves at Mansion House), in addition to MPC members Pill & Mann through the week,
BoE Meeting | SONIA BoE-Dated OIS (%) | Current Effective SONIA Rate (bp) |
Dec-24 | 4.657 | -4.3 |
Feb-25 | 4.473 | -22.7 |
Mar-25 | 4.385 | -31.5 |
May-25 | 4.227 | -47.3 |
Jun-25 | 4.170 | -53.0 |
Aug-25 | 4.080 | -62.0 |
Sep-25 | 4.054 | -64.6 |
Nov-25 | 4.004 | -69.7 |
Dec-25 | 3.993 | -70.7 |
EQUITIES: Estoxx late Option Block trade
In Case missed, late large Option Block trades on Friday night.
- SX5E (15th Nov) 4700p, traded 8.9 in 29k.
- SX5E (20th Dec) 4700p, traded for 82.90 in 38k.
- SX5E (20th Dec) 4100p, traded for 5.60 in 45k.
USD: Buying interest emerging
- The Dollar was mostly flat against G10s overnight, AUD was up a small 0.14%, and the Yen was the standout worst performer, was down 0.59%, but has pared small losses to sits at -.48% since the Cash Govie open.
- The early price action in Europe has seen Bund closing its opening gap, clearing through Friday's high, which has in turn provided an underlying bid in Treasuries, if Cash was open, Yield will be a touch lower.
- Despite the early price action in Europe, new record highs for US Equities, Yields leaning lower, the Dollar is still now in the green across G10, Cable has dropped some 25 pips since the EU Cash Govie open, albeit well within last Week's range.
- The Greenback tests session high versus the PLN, SEK, CZK, GBP, EUR, CHF, SGD.
- EURUSD makes an attempt at 1.0700, ahead of support at 1.0683 Low Nov 6.
