Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
On the surface a quiet week, with bank and insurance snr paper average spreads only moving -0.2bps and -0.4bps respectively. Underneath French banks were particularly weak as the threat of government collapse looms. https://mni.marketnews.com/3Z8CjsRas In addition, the spectre of downgrades hangs over several of the French banks, with Moody's and Fitch already on negative outlook. https://mni.marketnews.com/4fNSUcG S&P are due to comment this evening, viewing a negative outlook move as the most likely outcome (29/11).
M&A remains a key theme for European financials. Several large European banks and insurance companies have excess capital on balance sheets. Acquirers can both capture this excess capital at targets and shape their own balance sheets to be leaner very rapidly - much more so than years of steady share buybacks.
UniCredit continues to make headlines. Having apparently decided the its potential Commerzbank merger is on hold, pending the German election early in 2025, it made an all share offer from Banco BPM (BAMIIM). https://mni.marketnews.com/49fcYlJ This offer, assumed to be only an opening salvo, built in very little premium for BAMIIM and was rejected by management, but did cause meaningful tightening in BAMIIM bonds. https://mni.marketnews.com/41cyt4D There were also rumours that Credit Agricole, already a 9% owner in BAMIIM was increasing its stake through derivatives.
Aviva made a bid for Direct line, valuing the insurer at £3.3bn, or 250p/share, which was rejected out of hand by Direct Line management. The bid was only slightly higher than a 236p bid management rejected in March. Both the bonds and equity are nonetheless pricing a high likelihood of a deal. https://mni.marketnews.com/498FdCJ
Meanwhile in Spain, positive ratings momentum continues with Cajamar getting a ratings upgrade at S&P.Its senior preferred rating climbs to BBB- and promotes it to investment grade. NPA's in the bank have fallen from 12% at the peak in 2019 to 4% now and further improvements looks possible. https://mni.marketnews.com/3B16la4
Bank of Ireland and Allied Irish Bank were both placed on positive outlook by S&P, reflecting collectively improved digital footprints, cost of risk and capital ratios.
Nationwide reported H1 results showing reduced profits, and falling rates put pressure on NIM. Volume growth was solid however and capital ratios remain extremely strong
Issuance was light this week, with DNB Bank issuing a 6NC5 SNP at MS+90 and Abanca issuing a 12NC7 Tier 2 at MS+245. Both deals have performed well.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.