UTILITIES: Orsted (ORSTED Baa2/BBB[N]/BBB+[N]): Moody’s Downgrade
Feb-13 13:05
We don’t expect much impact on this, with Moody’s now in line with the other two agencies. Our current base case is that S&P and Fitch ratings hold. Execution risk is elevated, however.
- Moody’s had a longer standing negative outlook; the other two agencies reacted to the recent results including large impairments. It’s view of management credibility and track record has been lowered due to recent operational problems.
- Moody’s sees FFO/net debt at least in the low 20s as appropriate for the rating, with 25% targeted for 2025. S&P sets the bar higher at above 25%.
- It sees execution risks to the farm down strategy, with assets still under construction to be relied upon. It notes the announced capex cuts, which are constrained by committed projects already under construction.
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Historical bullets
GILT PAOF RESULTS: GBP183.075mln of the 1.25% Nov-54 linker sold.
Jan-14 13:03
- GBP250.0mln had been available.
- This leaves GBP13.933bln of the linker in issue.
STIR: Repo Reference Rates
Jan-14 13:01
- Secured Overnight Financing Rate (SOFR): 4.29% (-0.01), volume: $2.211T
- Broad General Collateral Rate (BGCR): 4.28% (-0.01), volume: $852B
- Tri-Party General Collateral Rate (TGCR): 4.28% (-0.01), volume: $837B
- (rate, volume levels reflect prior session)
US TSYS: Early SOFR/Treasury Option Roundup
Jan-14 12:43
Mixed SOFR/Treasury options flow reported overnight, leaning towards downside put structures in the lead up to this morning's PPI data. Underlying futures modestly firmer but scaling off of early London session highs. Projected rate cuts through mid-2025 continue to retreat, current vs. late Friday levels* as follows: Jan'25 steady at -0.7bp, Mar'25 steady at -4.9bp, May'25 -9.0bp (-8.4bp), Jun'25 -16.5bp (-16.3bp), Jul'25 steady at -18.7bp.
- SOFR Options:
- 3,200 SFRJ5 95.62/95.75/95.81/95.88 broken put condors
- 3,200 SFRU5 95.87 puts vs. 95.87/96.12 call spds
- 7,000 SFRJ5 95.50/95.56 put spds ref 95.835
- 2,000 SFRM5 95.37/95.62 put spds ref 95.835
- -3,500 SFRU5 95.00/95.75 2x1 put spds, 12.0 ref 95.885
- Treasury Options:
- 1,100 USJ5 110/112/114 put flys
- 2,250 FVG5 106.25/106.75/107.50 broken call flys
- 2,000 TYJ5 107/107.5 put spds ref 107-14
- 4,500 TYG5 107 puts
- +10,000 TYG5 108 calls, 16 vs. 107-15/0.32%
