EU TRANSPORTATION: Air France-KLM; revisit to SLB steps
(NR/BB+/BBB-)
GHG emissions per revenue ton-kilometre were at 928 last year, down -0.9%yoy and -3% vs. 2019. It needs to hit -10% vs. 2019 (eqv. 851) by Dec-2025 to prevent a 75bp payment at maturity on the May-26s and a 37.5bp annual step up on the 28s (i.e. +37.5bp on May-27 and May-28 interest payment dates).
Hard for us to model exactly - it was using 1.25% in SAF fuel, EU rules mandate airlines need to push that to 2% this year. Bigger mover will be on pace of fleet deliveries - it is blaming delays on this for the lack of move thus far but can move easily on it (newer aircrafts consume -15-30% less fuel per passenger km). In 2023 it moved 27% of its fleet to new-gen - up from 20% the year before. It is targeting 80% by 2030.
We don't mind unadj. levels on 26s itself.
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ESM ISSUANCE: 6-Month ESM-Bill Auction Results
| Type | 6-month bills |
| Maturity | Aug 21, 2025 |
| Amount | E1.099bln |
| Target | E1.1bln |
| Previous | E1.084bln |
| Avg yield | 2.339% |
| Previous | 2.485% |
| Bid-to-cover | 3.53x |
| Previous | 3.51x |
| Previous date | Jan 21, 2025 |
EQUITIES: Estoxx Put Spread
SX5E (19th Dec) 4900/4300ps, bought for 67.2 in 14k.
OUTLOOK: Price Signal Summary - USDJPY Support Remains Exposed
- In FX, a bull cycle in EURUSD remains intact and the pair is trading closer to its recent highs. Last week’s gains have reinforced current conditions and strengthened a short-term reversal signal on Feb 3 - a hammer. This suggests scope for an extension near-term. The pair has breached the 50-day EMA, at 1.0432, and sights are on 1.0533, the Jan 27 high. Initial firm support lies at 1.0280, the Feb 10 low.
- A bull cycle in GBPUSD remains in play and the pair is holding on to its recent gains. A recent breach of resistance at 1.2550, the Feb 5 high, confirmed a resumption of the current uptrend. Furthermore, 1.2610, 38.2% of the Sep 26 ‘24 - Jan 13 bear leg, has been pierced. A continuation higher would strengthen current conditions and open 1.2767, the 50.0% retracement. Key short-term support is 1.2333, the Feb 11 low. First support lies at 1.2466, the 20-day EMA.
- USDJPY continues to trade below the Feb 12 high. Recent weakness highlights that - for now - a key resistance around the 50-day EMA, at 154.24, remains intact. A clear break of the EMA is required to confirm a stronger bullish reversal. This would open 155.89, the Feb 3 high. Key support and the bear trigger is unchanged at 150.93, the Feb 7 low. Clearance of this level would resume the bear cycle that started on Jan 10.
