UK Breakevens Offer Value on ASW; Month-End, Coupon Support: RBS
Source: BFW (Bloomberg First Word)
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Simon Peck (Royal Bank of Scotland Group PLC)
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UUID: 7947283
(Bloomberg) -- There is value in buying the UKT I/L 2046s cash breakeven, RBS strategist Simon Peck writes in a client note.
Alert: HALISTER1- Recommends owning the bond on the IL 37/46/55 real yield fly, and buying on ASW with the issue appearing 2.5bps cheap vs fitted ASW curve
- Still constructive on U.K. breakevens: despite recent underperformance, fundamental drivers remain unchanged
- I/L 2046s syndication likely to re-focus investors on the market, believe they will conclude this is a good opportunity to buy linkers
- Size estimated at GBP3b notional, equates to approximately GBP12m/bp in risk terms
- Syndication will affect month-end index extension, extending U.K. Actuaries FTSE All Stocks index by +0.07 and the >15y index by +0.01
- I/L coupon payments for GBP800m that were due yesterday should result in some re-investment flows from investors who track long-dated benchmarks
Source: BFW (Bloomberg First Word)
People
Simon Peck (Royal Bank of Scotland Group PLC)
To de-activate this alert, click here
UUID: 7947283