SONIA: SONIA FIX - 26/02/25

SONIA FIX - Source: BBG/ICE

• 1M 4.54950
• 3M 4.49540
• 6M 4.41300
• 12M 4.29710

The 10-year RAGB/Bund spread has widened ~2bps since this morning’s dual-tranche syndication mandate, now at 37bps. This leaves 10-year RAGBs underperforming semi-core peers (Netherlands, Ireland, Belgium, Portugal and France) intraday.

• The timing of Austria’s first syndication had been uncertain due to questions surrounding the budget outlook. MNI had looked for a transaction this week or in the first half of February – with a lean towards the latter.
• A new 10-year Feb-25 RAGB maturing 20 February 2035 will be launched alongside a tap of the 1.85% May-49 Green RAGB – in line with MNI’s expectations.
• A reminder that the EU decided not to proceed with an Excessive Debt Procedure on Austria earlier this month, after negotiators attempting to form a right-wing coalition presented a E6.4bln savings plan.
• On Jan 10, Fitch revised Austria’s outlook to Negative from Stable (rating affirmed at AA+).
• As of Q3 ‘24, the 4Q rolling sum of the budget balance was -3.7% of GDP (vs -3.3% in Q2). Both Bloomberg analysts and the EC expect the 2024 budget balance to print at -3.6% of GDP, down from -2.6% in 2023.

Looking at the UK, this looks to be a record Extension for the Month of January at least for Bloomberg (Used to be Barclays).

Bloomberg Bonds projected:

• US Tsys: +0.07yr (small, average).
• EU Govies: +0.10yr (decent).
• UK Govies: +0.23yr (HUGE).

MS Bonds:

• US Tsys: +0.05yr (small).
• EU Govies: +0.07yr (small, average).
• UK Govies: +0.17yr (LARGE).