EU UTILITIES: SSE: 1H25 Results
Nov-12 08:48
(SSELN; Baa1/BBB+/A-)
Credit neutral. Leaked equity raise confirmed, with the announced investment levels largely aligned to BBG consensus. Supply will remain elevated, averaging £2.8bn p.a.
- Five-year investment plan of £33bn announced. It will raise £3bn of equity to support that. Debt funding including hybrids will be ~£14bn, with net leverage to remain below 4.5x. Operating cash flow and small asset rotations will make up the remainder.
- Adj. EBITDA fell 13%, with drag from weather conditions and lower hedged prices in renewables. Energy Customer Solutions had a positive one-off in the prior year. In line with its expectations.
- FCF -£0.6bn from flat, with increasing capex exceeding CFO.
- Net leverage expected to reach 3.5-4x at FY, from 3.2x at FY25.
- Guidance for FY26 and FY27 confirmed.
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EGBS: 10-year Spreads To Bunds Unwind Friday's Tariff Induced Widening
Oct-13 08:38
10-year EGB spreads to Bunds have partially unwound Friday’s US/China tariff-induced widening, with equities recovering following the White House’s softened weekend stance. The BTP/Bund spread is down 1bp at ~80.7bps, after reaching a high of 82bps on Friday.
- The 10-year OLO/Bund spread is 0.5bs narrower at ~56.2bps. Moody’s completed a periodic review of Belgium’s ratings on Friday, with no action taken. This was in line with our expectations, but markets may have embedded some risk of a downgrade ahead of the event - this is now being unwound. OLOs still face risks though, with Belgium’s debt/deficit trajectory on a similar (if not worse) trajectory than that of France. Markets are still awaiting details of Belgium’s 2026 budget.
- Markets remain sensitive to French headline flow. Lecornu’s reappointment as PM is unlikely to reduce medium-term fiscal/political challenges facing France, so scope for meaningful OAT/Bund tightening still appears limited. OATs currently underperform peers, with the 10-year spread to Bunds little changed at ~83bps.
- Local media report that Lecornu will aim for a 2026 budget deficit of “below 5%”. This will likely be larger than the 4.7% deficit he initially targeted.
BOBL: Block trade
Oct-13 08:38
Bobl Block trade, suggest buyer:
- OEZ5 ~3.13k at 118.23.
EGB OPTIONS: Bund Call Spread vs Put Condor
Oct-13 08:32
RXX5 130.00/132.00 cs vs RXX5 127.50/126.50/125.50/123.00 broken p condor, bought back the cs for 12 in 7.25k.
