Last week the EUR IG credit index widened 3.6bp WoW. Financials outperformed widening +1.9bp on average, while Industrial and Utilities widened +5.0bp and +3.3bp respectively.
Within financials, SP bonds widened 1.7bp with French banks underperforming at +3.6bp led by the long-end of ACAFP. SNP widened by +4bp with the core assets leading again the performance. Regionally, CH widened +6.2bp, GB +4.8bp, and NL +4.7bp despite the positivity of the results reported. In Sub, Tier 2 bonds were +1.5bp with the short-end of peripheral assets offsetting some of the move (overall, HE -5.2bp and PT -3.2bp). AT1s were slightly tighter at -0.6bp as the move in rates supported a risk-on mood during the week. PT and HE bonds were by far the best performing assets at -16.8bp and -15.6bp respectively while ACAFP 4% saw solid demand at -22bp WoW.
Main events from last week:
- On Monday, launched a €6.3bn voluntary public offer for Banca Generali, offering an ~11% premium via its 13% stake in Generali
- On Wednesday, Moody’s has released a request for comment on proposed changes to its bank rating methodology, potentially affecting 14% of rated banks, with most changes expected in Europe.
- After news on Monday last week confirming talks between Erste and Santander for the sale of the latter’s stake in its Polish subsidiary (Santander Bank Polska), both banks confirmed yesterday the operation will finally take place, with Erste making a total cash consideration of EUR7.0bn for the acquisition of Santander’s 49% stake in the Polish bank.
The week ahead will be busy with more earning releases from EU banks –see the calendar on page 3. On the Macro front in the US the FOMC meeting will take place on Wednesday, while the Initial Jobless claims will be on Thursday. The EU will have a number of CBs including Poland on Wednesday and the BoE and Riksbank on Thursday.