Bayer (BAYN; Baa2 Neg, BBB S, BBB S)

CDS moves wider, cash holds firm, no sign of Moodys.

• Its been low vol for Pharma's recently including Bayer which after some strong deleveraging in FY23 has hit pause on its widening. We haven't seen the same for its CDS (Main member) that's now at +132, widening +16bps vs. cash 29's -6-8bp rally since earnings. Its moved basis to highest levels in recent months (~ +20bps).
• We're not sure if protection is bid on nerves around Moody's (on neg outlook) who is taking its time to comment on earnings/FY24 guidance. As we've mentioned before, Bayer is priced for ~1-notch downgrade trading in-line with VTRS (Baa3 S, BBB- Neg) - VTRS does have positive outlook from equity analyst but still needs to delever this yr (which mgmt affirmed) to hold onto ratings.
• Moves on Bayer CDS are not being driven by broader CDS/basis - Main is flat since earnings with BAYNGR spread +77bps to it & now the 3rd widest in the index.