NBP: Governor Sees No Reason To Cut Interest Rates
Feb-06 14:25
Governor Adam Glapinski says that considering current inflation dynamics and the inflation outlook there is "no reason" to cut interest rates, with accelerating economic recovery, tight labour market and loose fiscal policy amplify the risk of elevated inflation becoming entrenched.
- The Governor says that Poland's robust economic growth is a positive, but is also pro-inflationary and delays the return to the inflation target.
- He notes that unemployment is very low, the labour market is very tight, hence wages continue to grow at a pace close to +10% Y/Y, which affects services prices and core inflation. He adds that core inflation is "stubborn".
- The Governor now points to the relatively wide budget deficit (fiscal gap to GDP ratio is will be among the biggest in the EU this year), noting that it reduces room for monetary easing.
- The Governor says that the Council is aware of the fact that sources of elevated inflation are entirely independent from the central bank.
- However, it still needs to keep monetary policy restrictive in order to prevent elevated inflation from becoming embedded in inflation expectations.
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PIPELINE: $5B ADB 3Y SOFR Debt Launched
Jan-07 14:23
Shaping up to be another busy day for corporate bond issuance - unlikely to outpace Monday's record $59.55B.
- Date $MM Issuer (Priced *, Launch #)
- 01/07 $5B #ADB 3Y SOFR+31
- 01/07 $1b #Kuwait Finance House (KFH) 5Y SOFR Sukuk +95
- 01/07 $6B European Investment Bank (EIB) 5Y SOFR+42
- 01/07 $500M DBJ WNG 10Y SOFR+73
- 01/07 $500M Boston Gas WNG 10Y +145a
- 01/07 $Benchmark Chile 12Y +137.5a
- 01/07 $Benchmark World Bank 7Y +54
- 01/07 $Benchmark Met Tower 3Y +70a
- 01/07 $Benchmark CIBC 5Y SOFR+75a
- 01/07 $Benchmark Protective Life 7& +105a
- 01/07 $Benchmark Kommunalbanken 5Y +51
- 01/07 $Benchmark Santander 5Y +135a, 10Y +160a
- 01/07 $Benchmark APA Corp 10Y +180a, 30Y +215a
- 01/07 $Benchmark Cncl of Europe Dev Bank 5Y SOFR+45a
- 01/07 $Benchmark GA Global Funding 5Y +120a, 10Y +150a
- 01/07 $Benchmark HPS Corporate Lending 3Y +165a, +7Y +195a
- 01/07 $Benchmark Kexim 3Y +55a, 3Y SOFR, 5Y +75a, 10Y +90a
- 01/07 $Benchmark SMFG 5.25Y +100, 5.25Y SOFR, 7Y +110a, 10Y +120a
- 01/07 $Benchmark Daimler Truck Fin NA 3Y, 3Y SOFR, 5Y +105a, 7Y +115a, 10Y +125a
- Expected Wednesday:
- 01/08 $Benchmark Inter-American Development Bank (IADB) 5Y SOFR+45a
BONDS: J.P.Morgan Enter Longs In Bunds, More Cautious In GBP Rates
Jan-07 14:21
J.P.Morgan write “trade war/tariff uncertainty from US Trump policy remains a downside risk to Euro area growth and given the recent back up we now turn bullish on Euro duration (receive 1Yx1Y ESTR, enter longs in 10Y Bunds).”
- They think that the “heavy January supply calendar is already baked into intermediate German yield valuations.”
- Meanwhile, in the UK, they believe that “valuations in GBP rates are cheap vs. our BoE forecast (~60bp of easing priced over 2025 vs. J.P.Morgan’s 100bp forecast)” but “are more cautious on entering outright longs in GBP rates given the fiscal easing announced in October adds uncertainty over the path of BoE easing.”
EGB SYNDICATION: Italy 10-year Aug-35 BTP / 20-year Apr-46 Green BTP Mandate
Jan-07 14:20
- "The Republic of Italy has mandated Banca Monte dei Paschi di Siena S.p.A, BNP Paribas, Citibank Europe Plc, Crédit Agricole Corp. Inv. Bank, NatWest Markets N.V. and UniCredit S.p.A for a dual tranche syndicated issuance of a new 10-year BTP due 1 st August 2035 and a €5 billion no-grow issuance of a new BTP Green due 30th April 2046." Source: MEF
- We had noted that we thought there would be an Italian syndication this week and that we would see a new 10-year BTP launched in January (but we had thought the 10-year launch would be via auction and that we would have seen a 15-year via syndication this week).
- We pencil in a transaction tomorrow with E10bln for the 10-year tranche in addition to the E5bln WNG size for the new green 20-year (the 20-year area was one we had highlighted as the potential for a new green BTP).
