EU AUTOMOTIVE: Volkswagen (VW): S&P Outlook Negative
Outlook negative reflects base case that metrics recover in FY27, with downside risks to that view. Upcoming product launches will be an important factor.
We had concerns for ratings since the latest Porsche profit warning in September, but at the time S&P put out a bulletin focusing on the expected recovery post restructuring. That helped keep spread reaction muted. This update revises FY26 FOCF margin 70+bp lower; increasing BEV share is part of the story along with weak global demand.
Slightly negative for spreads, which already reflect weak sentiment.
• S&P cited the following key risk issues: China, tariffs and weak global demand. It gave VW credit for its cost reduction efforts and overhaul of model portfolio. Its assumptions include ongoing difficult conditions in China and similar tariff impact in FY26.
• S&P forecasts adj. EBITDA margins of 7.2%/8.5% for FY25/26. Its rating threshold is 9-10%.
- It projects FOCF/Sales of 0.8%/under 2% against 2-3% rating threshold.
- Metrics remain constrained by restructuring costs, which should ease from FY27.
- Financial risk has been reassessed negatively following volatility in recent years’ results.
- Traton is also on outlook negative as a result.
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EU-BOND SYNDICATION: 2.50% Oct-30 EU-bond tap
- Guidance: MS + 15bps area
- Tap Size: E5bln (WNG) (MNI expected E5-6bln)
- Settlement: 25 Nov 2025 (T+5)
- Maturity: 14 October 2030
- ISIN: EU000A4EG021 (immediately fungible)
- JLMs: GSBE SE / HSBC / J.P. Morgan (DM/B&D) / Natixis / UBS
- Timing: Books open, today’s business
AUDUSD TECHS: Bear Threat Remains Present
- RES 4: 0.6660 High Sep 18
- RES 3: 0.6644 76.4% retracement of the Sep-Oct bear leg
- RES 2: 0.6618 High Oct 29 and a key near-term resistance
- RES 1: 0.6525/6580 20-day EMA / High Nov 13
- PRICE: 0.6492 @ 08:05 GMT Nov 18
- SUP 1: 0.6459 Low Nov 5
- SUP 2: 0.6440 Low Oct 14 and key support
- SUP 3: 0.6415 Low Aug 21 / 22 and a bear trigger
- SUP 4: 0.6373 Low Jun 23
A sharp move down this week so far, in AUDUSD, highlights a clear bear threat. This also reinforces a short-term bearish signal on Nov 13 - a shooting star (inverted hammer) candle formation. Note too that moving average studies are in a bear-mode position, highlighting a dominant downtrend. Key short-term pivot resistance has been defined at 0.6580, the Nov 13 high. A continued sell-off would expose 0.6440, the Oct 14 low.
US TSY OPTIONS: TYFG6 114.50 Calls Lifted
TYF6 114.50 calls 3K trades at 0-17, initial activity was buyer initiated.
