EM CEEMEA CREDIT: RJHIAB: new issue deal FV
May-07 08:32
Al Rajhi Bank (RJHIAB: Aa3/-/A-)
New issue deal: USD 5Y bench Sukuk
IPT at T+125bp area
FV at T+85bp area
- Saudi Arabia’s financial institution Al Rajhi Bank is in the primary market with a USD benchmark 5Y tenor in Sukuk format. We sketch our FV considerations looking at the seasoned secondary curve as well as some comparables. Our feeds show RJHIAB 5.047 Mar29 charting at z+118bp, we add a couple of bp for curve extension to z+120bp or T+85bp area.
- Looking at peer names, our FV analysis in z-spread terms shows approx. 15bp inside recently launched MASQUH 30s charting at z+134bp and over 40bp inside AJMNSS 30s charting at z+163bp (see chart below).
- For context, we also look at curve moves YtD, with PIF of KSA Sukuk curve as our main anchor point. We note that the spread widening of 25/35bp looks in line with that of Al Rajhi Bank curve.
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CROSS ASSET: UBS Look For Further Equity Selling & Bond Buying From CTAs
Apr-07 08:29
UBS' latest CTA positioning update notes the following:
- “reduction of CTA equity exposure in the past few weeks is helping them navigate the Tariff-induced turbulence. Before the announcement on Wednesday, they were more or less neutral and are about to turn net short. Unless equity prices rebound by at least 5%, CTAs will be selling. By probability weighting different scenarios, we see $40/50bln of potential selling over the next two weeks”.
- “Bonds are back in CTAs' favour. After being consistently underweight duration since 2022, CTAs are about to turn bullish this month. We expect them to buy all major bond futures, 10y JGBs are experiencing one of the largest reversals ever”.
- “A meltdown in credit, CTAs are aggressive sellers and likely to remain so in the near term. Itraxx Main and CDX IG will be the most impacted by their coming flows”.
- “CTAs have not done much in FX in the last 2 weeks, a little bit of G10 FX buying vs. a little bit of EM FX selling. We expect FX flows to restart in April, starting by selling the USD. JPY, GBP, CHF & CNY are likely to be the main beneficiaries, at least in the short-term”.
- “In commodities, we expect CTAs to sell all four cohorts, including precious metals. They remain max long Gold but are likely to sell Silver and Platinum in size. Industrial metals and Energy should remain under heavy CTAs' selling pressure”.
BUNDS: German 2s/10s Block trades
Apr-07 08:26
German 2s/10s, suggest steepener:
- RXM5 ~2.4k sold at 131.65.
- DUM5 ~13.5k bought at 107.70.
SOFR: SFRM6/Z6/M7 Fly Sold
Apr-07 08:23
Recent trade in the SFRM6/Z6/M7 fly saw ~3K given at -11.5.
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