EM CEEMEA CREDIT
IPT @ 7.75% FV @ 7.375%
- We see FV @ 7.375%, reflecting a 50bp pick up vs the seasoned USD 10.25NC5.25 Tier2 OTPHB 8.75 33s currently charting @ 6.875% area. For reference, we also see EUR sub bench 10NC5 Tier2 NOVALJ 6.875 34s charts @ 7.125% region x-ccy adj (4.95% in EUR).
- The new issue deal follows the increase on Jan 20 of the EMTN Programme to EUR7bn from EUR5bn, which comes eight months after the Programme was last updated. OTPHB last came to the primary market with a 6NC5 EUR denominated senior pref benchmark in October ‘24.
- Moody’s affirmed ratings early in December. The outlook for Baa1 LT deposit ratings went to positive, whilst the outlook for the Baa3 Senior Unsecured debt rating went to negative.
- The agency was keen to point out the negative outlook on snr unsecured bonds reflecting the downside risk stemming from the sovereign's neg outlook on its current Baa2, potentially getting closer to impacting the one notch uplift (but not there yet). On the other hand, the agency was clear in pointing out that the credit metrics look favourably and therefore revisited the outlook to positive on the LT deposit ratings (citing margins and capital adequacy). The entire construct remains underpinned by the affirmed Baseline Credit Assessment (BCA).
- OTPHB 3Q24 earnings proved a good read. Total income stood @ HUF676bn, +13% YoY, with NII +15% YoY @ HUF444bn and NIM stable @ 4.26%. Asset growth, whilst marginally lower vs Q2, was +5% YoY @ HUF41.56tn. Strong capital adequacy with CAR @ 20.5% and CET1 @ 19.1%.
- Hungary’s largest bank, OTPHB is well positioned in CEE with a strong domestic retail base and through recent acquisitions in Slovenia and Uzbekistan among the others.
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