OIL: Tengiz Expansion May Reach Capacity by Mid-2025

• Date $MM Issuer (Priced *, Launch #)
• 01/14 $2.5B #BNG Bank 5Y SOFR+47
• 01/14 $2.5B #CADES 5Y SOFR+68, upsized from $2B
• 01/14 $3B KFW +5Y +40
• 01/14 $2B IFC 3Y SOFR+29
• 01/14 $2B CAF 5Y SOFR+82
• 01/14 $Benchmark Blackstone Private Cr Fund 7Y +190a
• 01/14 $Benchmark LifePoint Health 7NC3 
• 01/14 $Benchmark Adobe 3Y +50a, 5Y +60a, 10Y +80a
• 01/14 $Benchmark British Colombia 3Y SOFR+45
• 01/14 $Benchmark BFCM 5Y +120a, 5Y SOFR
• 01/14 $Benchmark Hyundai 3Y +100a

December's PPI report showed softer sequential price pressures than had been expected: headline final demand PPI came in at 0.2% M/M (0.4% expected, 0.4% prior), with the "core" ex-food/energy/trade category printing 0.1% (0.3% expected, 0.1% prior). From a broader perspective for this volatile series, pipeline inflation remains uncomfortably elevated. But this was not a particularly worrisome report in its own right and core PPI - while still elevated - does not appear to be accelerating.

• This left the Y/Y figures higher vs November but lower than expected: headline at a 22-month high 3.3% (3.5% expected, 3.0% prior), with ex-food/energy/trade actually decelerating to 3.3% (no consensus, 3.5% prior).
• So on the one hand, headline PPI has been steadily accelerating Y/Y since bottoming at 0.8% in Nov 2023 and is now at a 22-month high, but Core PPI prices have settling in at above 3.0% Y/Y, where it has been for 9 consecutive months. That lends further credence to the idea that the prolonged period of Y/Y core goods deflation is over - but likewise there are no obvious signs of a pronounced resurgence in pipeline inflation outside of food and energy.
• Indeed, as the headline figures suggest, food (+6.4% Y/Y after +6.7%) and energy (-2.0% Y/Y after -6.1%) prices have been more inflationary/less deflationary, respectively, on an annual basis.
• But we interpret the "core" reading to imply that pipeline price momentum has continued to slow: at 1.9%, the 3-month annualized moving average fell to 1.9% from 2.1% prior, well down from over 5% earlier in 2024 for the lowest since December 2023. The 6-month m.a. likewise pulled back to the softest since November 2023.
• For the two major subcategories of final demand PPI, services inflation was flat, vs 0.3% M/M prior for the weakest since July, while goods inflation came in at 0.6% (after 0.7%).
• As we noted separately following the release, the PCE-relevant categories were mixed, with a jump in airfares the standout but fairly benign readings in other areas.

New 3-year:

• Reoffer: 99.999 to yield 2.628%
• Spread set earlier at MS+17bps (guidance was MS + 19 bps area)
• HR 105% vs 2.20% Apr-28 Bobl +32.4bp (ref 99.675 / 2.304%)
• Tranche size set earlier at E6bln (guidance was E5bln, MNI expected E5-7bln)
• Books closed in excess of E82bln (inc E5.75bln JLM interest)
• Maturity: 4 July 2028
• Coupon: 2.625%, short first coupon
• ISIN: EU000A4D5QM6

3.375% Oct-54 Tap:

• Reoffer: 94.8089 to yield 3.664%
• Spread set earlier at MS+127bps (guidance was MS + 130 bps area)
• HR 91% vs 2.50% Aug-54 Bund + 82.0bp (ref 93.15 / 2.844%)
• Tranche size set earlier at E5bln in line with guidance (MNI expected E4-6bln)
• Books closed in excess of E115bln (inc E5bln JLM interest)
• Highest book for a tranche since 2021
• ISIN: EU000A3K4EY2 (Immediately fungible)

For both:

• Settlement: 21 January 2025 (T+5)
• JLMs: Barclays, BNP Paribas, J.P. Morgan (B&D/DM), LBBW, NatWest Markets
• Timing: TOE 14:29GMT / 15:29CET. FTT immediately