Last week the EUR IG credit index tightened -4.9bp with the market positively absorbing news on trade optimism. In this context, financials outperformed tightening -5.6bp on average, while Industrial and Utilities compressed by -4.7bp and -2.6bp respectively.
Within financials, SP bonds tightened -4.9bp with higher beta countries continuing to outperform in line with the trend from the previous week (HE -7.9bp and IT -6.3bp) and demand focused on tenors up to 5y. SNP bonds tightened -6.1bp on average with Core regions outperforming this time including IE at -8.3bp and FR at -7.6bp despite SOCGEN being active in primary with a double tranche deal. Tier 2 underperformed SNP at -5.9bp with PT (-13.6bp), IT (-7.7bp), and DE (-7.3bp) outperforming and BGAV ’35 showing as the best performing at -20bp. AT1s reported a solid performance in spite of the weaker rates and closed -19bp WoW, with PT tightening -40bp on the week and investors jumping back in lower reset instruments.
Main events from last week:
- Last Thursday, as part of its new branding campaign, Ibercaja definitively ruled out any plans for an IPO, an option that had been suspended following the Russian invasion of Ukraine in 2022 and was already excluded from its 2024–2026 strategic plan.
- On Friday, Bloomberg reported that CaixaBank is exploring a potential bid for Novo Banco S.A., while the bank is being prepared for an IPO by its majority shareholder Lone Star, which owns 75% of the total share capital. The Portuguese government retains a 25% stake in the group and would need to authorize any potential deal. Other rumored candidates interested in the bank include Caixa Geral de Depósitos (currently the largest lender in the country) and Groupe BPCE.
- Both Abanca and Unicaja issued statements on Monday morning rejecting the possibility of a merger with Banco Sabadell. Each emphasized their commitment to executing their respective strategic plans and maintaining independence. These denials follow a series of media reports, beginning with La Vanguardia on Sunday, which claimed that the Spanish government had advised Sabadell to secure a strong core of shareholders to fend off unsolicited bids—suggesting mergers with regional banks as a potential strategy. On Monday, Expansión reported that Sabadell and Abanca had held preliminary discussions regarding a possible merger. At this stage, the information remains highly speculative, with no official confirmation from any of the parties involved. The situation appears to be at a very early stage, and as such, we do not anticipate any significant market reaction.
The week ahead will offer a look at “Liberation Day” tariffs’ immediate impact on inflation in the US with April’s CPI Tuesday, PPI on Thursday, and import prices on Friday. In the EU, we will be waiting for the UK unemployment rate on Tuesday, and UK GDP growth and EU-area industrial production on Thursday.