(2) *GIP SAID IN TALKS TO BUY $4.5B STAKE IN SPAIN'S GAS NATURAL

*GIP SAID IN TALKS TO BUY $4.5B STAKE IN SPAIN'S GAS NATURAL

--AMY THOMSON
Alerts: HALISTER, HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
REP SM (Repsol SA)
GAS SM (Gas Natural SDG SA)
1013340Z US (Global Infrastructure Partners)
CABK SM (CaixaBank SA)
1002Z SM (Criteria Caixa SA - Single-Shareholder Corp)

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UUID: 7947283

HALISTER1: GBP Forward Swaps Fade Richness vs EUR Peers After U.K. PMI

GBP Forward Swaps Fade Richness vs EUR Peers After U.K. PMI

(Bloomberg) -- GBP swap forwards fade richness versus EUR equivalents following stronger than expected Aug. manufacturing PMI.
  • GBP 5y5y forward swap rate vs EUR spread at 26bp vs Aug. 29 low of ~13bp, narrowest level since Nov. 2012
  • See 1-year regression analysis here; R^2 at 0.65, y=0.289x+0.115, showing the RV dislocation highlighted on Aug. 30 here
  • GBP OIS forwards currently price 39% probability of a 15bp BOE rate cut to 0.10% by Dec. vs 52% yday, assuming 4.8bps Sonia-base rate corridor
  • NOTE: Tanvir Sandhu is an interest-rate and derivatives strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER1: Morgan Stanley Expects ECB Action in December Instead of Sept.

Morgan Stanley Expects ECB Action in December Instead of Sept.

(Bloomberg) -- In December, ECB may announce another 10bps deposit rate cut, a 6-month extension of QE and the inclusion of senior bank bonds in the purchase program, economists including Elga Bartsch write in a note.
  • Expects ECB Governing Council to wait and see rather than pulling the trigger on policy action
    • There were no hints of concrete ECB policy action being in the pipeline at the July press conference
    • Activity data continue comes broadly in line with the June projections, which are likely to stay broadly unchanged from the June forecasts
    • It seems that the ECB staff only need to make minor changes to the assumptions underlying the forecasts
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Elga Bartsch (Morgan Stanley & Co International PLC)

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UUID: 7947283

HALISTER1: AUCTION PREVIEW: Analysts Optimistic on New 10Y OAT Sale

AUCTION PREVIEW: Analysts Optimistic on New 10Y OAT Sale

(Bloomberg) -- France to sell 0.25% 11/2026, 1.25% 05/2036 and 3.25% 05/2045 for EU8b-9b at 10:50am CET.
  • Focus on new 10Y issue, with good demand expected; longer bonds offer value vs OLOs, repo levels supportive, say analysts
  • Citi (Saumesh Dutta)
    • Fair value of new OAT 0.25% 11/2026 ~8bps over current benchmark 0.5% 05/2026
    • 10yr sector is trading cheap vs fitted curve; 04/2026 issue is trading rich within the sector, switching into new 10Y for 14bps pick-up looks attractive
    • 20Y, 30Y issues offer limited value on domestic curves; see value vs Belgium, where OATs look historically cheap vs OLOs
  • SocGen (Marc-Henri Thoumin)
    • 10Y roll offers ~2bps yield pick-up, compares with 3bps at last new bond launched; 5s10s OAT looks steep compared vs OLO; expect some convergence after auction; continue to hold long 10Y OAT vs OLO
    • 10s20s, 10s30s OATs have recently steepened in ASW terms; more stable CB outlook in Europe, should contain flattening pressure in the long end
    • 05/2036 bond offers good pick-up vs OLO, expect some tightening after auction
  • Mizuho (Peter Chatwell)
    • See fair value of new 10Y roll at +6.5bps, see a case for it to trade slightly cheaper
    • 10Y sector has performed well on the curve in the run up to the auction, suggests good interest from investors
    • 30Y issue should meet decent demand given the issue trades special on repo, however are cautious on long end of core curves given risk of steepening if headline inflation rises by the end of year
  • Commerzbank (David Schnautz)
    • Expect French debt agency to exhaust the combined EU8-9b target range, with ~EU5.5b allotted to new 10y
    • Look for equal split of remaining EU3.5b between 20Y, 30Y issues
    • In RV, market appears well prepared after 10y OATs underperformed both on the OAT curve and vs OLOs yesterday
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Saumesh Dutta (Citigroup Inc)
David Schnautz (Commerzbank AG)
Marc-Henri Thoumin (Societe Generale SA)
Peter Chatwell (Mizuho Financial Group Inc)

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UUID: 7947283