EM CEEMEA CREDIT: SGLSJ: H1 out, strong YtD spread performance, ratings on neg
Aug-28 11:53
(SGLSJ; Ba2neg/BB-neg/BBneg)
- South Africa’s mining and metals processing group Sibanye-Stillwater posted H1 unaudited interim results, showing on-going challenges in gold production affecting overall performance. In secondary market, we look at recent spread performance vs pure-player, larger gold miners Gold Fields, AngloGold Ashanti, Endeavour as well as Navoi. Our feeds show SGLSJ 29s charting at z+335bp near the local lows, some 115bp tighter YtD.
- Operationally, we focus on updated Southern Africa gold production where FY25 guidance has been revised further down, following earlier operational issues. We note H1 prod’n remains -13% y/y having reached 300koz, with Q2 adding 159koz to a weak previous quarter. Co. cites challenges at Kloof operations (reference to seismicity and infrastructural constraints). FY guidance is revised down again to 480-514koz. Impact on AiSC at $2,430/oz, +17% y/y on lower volumes, with guidance revised up at $2,473-2,643/oz. Strong pricing (close to those achieved by pure player peers Endeavour and AngloGold) leaves adj EBITDA sequentially up 32% at ZAR4.8bn. FY25 capex unchanged at ZAR3.5bn.
- In PGM, improving pricing +9% y/y countered higher AiSC (+13% y/y) for South Africa’s operations ending with adj EBITDA approaching ZAR4.8bn, flat y/y. US operations contributed adj EBITDA of ZAR2.7bn (or USD151mn) for underground op’s and ZAR2.4bn (or USD129mn) for recycling.
- Elsewhere, for Nickel, European lower production resulted in marginal EBITDA loss at ZAR310mn. For Zinc, Australian y/y increase in production and lower y/y AiSC show increase in adj EBITDA at ZAR657mn.
- Financially, Co.’s H1 rev’s show -1% y/y at ZAR54.7bn. Loss before Tax at ZAR2.4bn with Net Attrib. Loss of ZAR3.59bn. Expect no interim DVD. Adj EBITDA is reported at ZAR15bn. Cash flow generation benefit from proceeds from Franco-Nevada stream dating back in Feb, with adj FCF sitting at ZAR4.47bn. Operationally, SA Gold remains FCF generative sequentially, whilst both US and SA PGM operations turned into FCF consumption on working capital movements.
- Liquidity remains adequate with cash & equiv at ZAR21bn sequentially up vs ZAR16bn in 2H24. UF include fully undrawn USD1bn RCF and ZAR3.5bn undrawn under ZAR6.5bn RCF. Net debt stood at ZAR19bn. Leverage remains low and well within debt covenants, with reported adj net leverage at 0.89x, sequentially lower vs 1.79x at YE24.
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US TSYS: Early SOFR/Treasury Option Roundup: SOFR Calls, Blocks
Jul-29 11:50
Option desks report better upside call trade in SOFR & Treasury options overnight, much better SOFR volumes as they segue from earlier put interest. Underlying futures firmer, projected rate cut pricing mostly steady vs. late Monday (*) levels: Jul'25 at -0.8bp, Sep'25 at -16.6bp (-17.4bp), Oct'25 at -28.1bp (-28.2bp), Dec'25 at -44.4bp (-44.5bp). Year end projection well off early July level of appr -65.0bp.
- SOFR OPTIONS
- Block, 20,000 SFRZ5 96.25/96.50/96.75/97.00 call condors, 3.25 ref 96.075
- Block, 5,000 SFRQ5 95.81/95.93/96.00 broken call flys, 3.75 ref 95.84
- 1,500 SFRZ5 95.25/95.62/95.75 broken put flys ref 96.075
- 9,200 SFRZ5 96.25/96.50/96.75/97.00 call condors ref 96.05
- 2,000 SFRZ5 96.25/0QZ5 97.18 call spds, 0.5
- +10,300 SFRQ5 95.87/95.93 call spds, 1.25 vs. 95.835/0.15%
- Block, 2,500 SFRV5 96.18/96.43 call spds, 4.75 ref 96.07
- 3,000 SFRU5 96.62/97.25 2x1 put spds, 6.5 ref 96.655
- 2,000 SFRH6 95.87/96.25 2x1 put spds over 96.87/97.12 call spds ref 96.28
- 9,000 SFRV5 96.25/96.31 put spds over 96.50/96.75 call spds, 3.5 net ref 96.07
- +1,200 SFRU5 96.00/96.18, 1.0
- 1,250 SFRU5 95.68/95.75/95.81 put flys, 0.75 ref 95.835
- +1,300 0QV5 96.31 puts, 3.0
- Treasury Options
- 12,000 TUV5 104.12/104.37 call spds ref 103-25.62
- +1,500 wk2 TY 107.75/108.75 put over risk reversals, 0.5 net
- 2,450 TYU5 112/113 call spds, 8 ref 110-25
- 1,000 TUU5 103.75/104.12 call spds, 4.5 vs. 103-18.87/0.20%
US TSY FUTURES: Following Bunds Higher
Jul-29 11:40
- Treasury futures are following German Bund's lead ahead of the NY open, climbing off modest overnight lows, albeit on light volumes ahead flurry of morning data ahead tomorrow's FOMC rate announcement.
- Tsy Sep'25 10Y futures currently +5.5 at 110-30 on volume of 215k (+30k over the last hour). Technical resistance at 111-14+, Jul 22 high. A clear break of it would highlight a stronger reversal and open 111-28, the Jul 3 high.
US-EU: Commission Doc Offers Little Concrete Info On Trade & Tariffs Deal
Jul-29 11:35
The European Commission has published a Q&A sheet on the deal on tariffs and trade announced over the weekend. The deal has been talked up as a compromise that will avoid the worst-case scenario of 30% US tariffs on EU goods and EU retaliation via the 'anti-coercion instrument'. Nevertheless, there remain holes with regard to details of what the deal will cover and how it will be implemented.
- The most important section of the document may indeed come at the end, where it notes, "The political agreement of 27 July 2025 is not legally binding. Beyond taking the immediate actions committed, the EU and the US will further negotiate, in line with their relevant internal procedures, to fully implement the political agreement."
- The document highlights the "single, all-inclusive US tariff ceiling of 15% for EU goods", which includes the most-favoured nation tariff rate. However, it then notes that if the MFN tariff is higher than 15%, only the MFN tariff will apply, not the 15% ceiling (implying that 15% is not in fact an all-inclusive ceiling). The 15% rate will apply to vehicles, and, when they are implemented by the US, on pharmaceuticals.
- As MNI's Policy team noted on 28 July, the US itself has yet to confirm the 15% ceiling, while there are also potential legal pitfalls should the Commission seek to push a deal through without a full ratification process by member states (see 'MNI: EU States Broadly Back EU-U.S. Deal - Officials', 28 July).
