POWER: Nordic Hydro Stocks Drop for 5th Week, Likely to Continue Fall in Week 6
Nordic hydropower reserves increased the rate of their fall for the second consecutive week in week 5 to be at 67.3% capacity, 85.50TWh as higher demand and below normal precipitation dented stocks. Stocks could continue to move downward this week amid the continued delayed start-up of the 1.17GW Forsmark 3, a weakened hydro balance and cooler temps.
- Stocks dropped by 3 percentage points on the week in week 5 compared to a 2.2-point fall at the end of week 4.
- Stocks narrowed their surplus on the year to 19.2 points compared to 21.3 points the week prior.
- However, precipitation in the Nordic region remained firm on the week to a total of 12.9mm from 12.25mn in week 4 but lower than the 30-year average of about 20mm.
- But strong demand on the week placed sustained downward pressure on stocks, with Norwegian demand averaging about 19.37GW from 19.47GW in week 4. Swedish demand averaged around 18.72GW from 18.59GW the week prior.
- However, nuclear generation in the region was relatively picked up on the week, with Swedish output at around 6.04GW from 5.82GW the week prior and Finnish generation at 4.19GW from 4.04GW.
- Nuclear generation increased amid the short-lived return of the 1.17GW Forsmark 3 nuclear on 1 February.
- However, the unit will be fully offline on 5 February at 18:00 CET until 7 February 12:00 CET compared to 5 February at 20:00 CET until 7 February 08:00CET.
- And full power is still expected to be reached on 10 February.
- Hydro levels narrowed to a 9.5-point surplus to the 19-year average from a 10.3-point surplus in week 4.
- Swedish reserves moved downward to be at 70.6% capacity from 73.1% capacity in week 4, while Norwegian reserves dropped to 67.1% capacity from 70.4% in week 4.
- And Finnish hydro stocks followed the same trend, falling to 50.3% of capacity from 51.9% in week 4 and still much lower than the same week last year at 53.1%.
- Looking ahead, the latest ECMWF suggests Norway’s and Sweden’s hydrological balance to end at +3.73TWh and +4.74TWh, respectively, on 19 February compared to +3.94TWh and +5.05TWh in the previous forecasts for the same day.
- Rainfall in the Nordics throughout the 6-10 day ECMWF forecasts will see well below-normal precipitation at just slightly above 0mm/d- which could continue to lower flows into the reservoirs.
And average temperatures in the region will be on a steady decline from 5 February and are seen flipping below the norm on 14 February to reach as low as -7.5C on 19 February.
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EGB FUNDING UPDATE: Netherlands 2025 Borrowing Requirement Update
DSTA notes the borrowing requirement for 2025 is now estimated at 106.4 billion (€1.4 billion higher than the previous estimate). The higher overall borrowing will be funded in full by an increase in money market issuance.
- "The call on the capital market remains unaltered at € 40 billion."
- The borrowing "estimate is surrounded by uncertainty due to several factors in the government finances. Historically, this has led to a lower funding realization at the end of the year compared with the announcement in the beginning of the year."
AUSTRIA: Pres. Tasks Far-Right Leader w/Forming Gov't After Chancellor Resigns
President Alexander van der Bellen has confirmed that he is tasking leader of the far-right Freedom Party of Austria (FPO) Herbert Kickl with forming a coalition gov't. Van der Bellen says Kickl will report back to him as he holds talks with the conservative Austrian People's Party (OVP). This is the second time that Kickl has been given the mandate to seek to form a gov't after the FPO won a plurality of seats in the September 2024 federal election. Then, the OVP refused to engage in talks as the FPO insisted that Kickl would come in as chancellor.
- However, OVP chair and Chancellor Karl Nehammer announced his resignation over the weekend. The collapse of tripartite talks involving the OVP, centre-left Social Democrats (SPO) and the liberal NEOS, was the first sign that a moderate gov't might not be possible. This was followed by the OVP and SPO proving unable to continue in two-party talks, sparking Nehammer's resignation.
- It had been seen that an FPO-OVP gov't would not be possible with both Kickl and Nehammer leading their respective parties. The resignation of Nehammer could therefore set the stage for a right-wing gov't to come to power in Vienna. The other options include a tripartite gov't involving the OVP, SPO and Greens (very unlikely following the political upheaval of the weekend) or snap federal elections if no stable gov't is feasible.
US TSY FUTURES: US$ Debt Issuance Roundup: Saudi Arabia, SocGen, MUFG on Tap
- Date $MM Issuer (Priced *, Launch #)
- 01/06 $Benchmark Saudi Arabia 3Y +120a, 6Y +130a, 10Y +140a (for context: Saudi Arabia last issued $5B sukuk on May 28: $1.25B 3Y +60, $1.5B 6Y +75, $2.25B 10Y +85)
- 01/06 $Benchmark Societe Generale 4.25NC3.25 +150a, 4.25NC3.25 SOFR, 8.25NC7.25 +190a
- 01/06 $Benchmark National Australia Bank (NAB) 5Y +75a, 5Y SOFR, 11NC10 +150a
- 01/06 $Benchmark Hyundai Cap Am 3Y +100a, 3Y SOFR, 5Y +120a
- 01/06 $Benchmark India Export-Import Bank 10Y +130a
- 01/06 $Benchmark MUFG 6NC5 +100a, 11NC10 +115
- 01/06 $500M DBJ WNG 10Y SOFR+78a
- 01/06 $Benchmark Kexim investor calls
- $1B Priced last Friday, $15.6B total for the week
