RUSSIA: Russia Asking Companies for Sanctions Relief Proposals: RTRS

• Size: GBP13bln (higher than the GBP8.5-10.0bln we expected)
• Orderbooks in excess of GBP140bln (inc JLM interest of GBP12bln)
• Spread set at 4.25% Jul-34 gilt + 5.5bp (guidance was + 5.5/6.0bps)
• Maturity: 7 March 2035
• ISIN: GB00BT7J0027
• Settlement: 12 February, 2025 (T+1)
• Bookrunners: Barclays, BNP Paribas, Citi (B&D/DM), Goldman Sachs International Bank, HSBC and NatWest.
• Timing: Books closed. Allocations and pricing later on today

From market source

Rounding up some of our earlier observations:

• Ahead of today we had questioned if Mann would only be a temporary dove - and she said today that being an activist does not mean "cut, cut, cut".
• She noted that just because she voted for 50bp in February doesn't necessarily mean that she will vote for a 50bp cut in the upcoming meetings - and that it was partly a signalling device.
• Both in her speech and in the Q&A she made reference to the MaPS (BOE's survey of market participants) estimated neutral rate of 3.0-3.5% - and made no reference to the model-based estimates that were included in the MPR. We therefore think that 3.0-3.5% is likely to be more representative of Mann's own view of the neutral rate.
• Mann also reiterated that she thinks Bank Rate needs to remain restrictive - just not as restrictive as it currently is. With Bank Rate now at 4.50%, there is only 100bp before we reach the 3.50% top estimate of neutral from the MaPS. So as we noted in our BOE Review, we think that she will vote for sequential cuts at least at the next two meetings (March and May) but we aren't convinced of the magnitude of the move that she will vote for.
• She laid out a number of things she is watching to determine her future votes - and noted that risks of second-round effects cannot be ruled out, she just doesn't consider them the most likely outcome "yet". She points to distributions in the wage data (wage growth in non-consumer facing firms is target consistent), weak demand and non-linearities in the labour market, firms reducing employment due to employer NIC increases, firms having weak pricing power and soft sales volumes as reasons she isn't too concerned for now.
• So she is probably a temporary dove - although that partly depends on how quickly the wider MPC returns Bank Rate towards neutral - and partly how the incoming data come in over the next few months - particularly on the labour market and firms' pricing power.

Heavy sovereign supply has weighed on major EGB futures this morning, with syndications from Italy and the EU being held alongside conventional auctions from the Netherlands (earlier this morning) and Germany (1030GMT).

• A rally in oil prices and digestion of US President Trump’s steel/aluminium tariff announcements (and the latest EU retaliatory threats) will have also factored in.
• Bund futures are -44 ticks at 133.06, flirting with the 50-day EMA at 133.05. However, better support is seen at the Feb 4 low at 132.72, before the 20-dam EMA at 132.53.
• The German cash curve has bear steepened, with yields 3-4bps higher today.
• Little net change in 10-year EGB spreads to Bunds on the day.
• ECB Executive Board member Schnabel participates in a panel appearance this evening (1700GMT). With a light regional data calendar, tariff-related headline flow and Fed Chair Powell’s Senate testimony will be in focus.