Many had expected an interest rate pause, but yesterday's ECB rate hike was not a big surprise. Among corporates, names like Sixt continue to do well. Also popular: the new Katjes bond.
15 September 2023. FRANKFURT (Börse Frankfurt). Despite increasingly poor economic data - the ECB is resolutely continuing its fight against inflation. Yesterday, the ECB raised the deposit rate to 4 percent and the main refinancing rate to 4.5 percent, both by 25 basis points. But according to central bank chief Christine Lagarde, policy rates have now reached a level that will contribute significantly to bringing inflation down to target. "In our reading, Lagarde has thus set the bar quite high for further rate hikes," explains bond analyst Marco Wagner of Commerzbank.
"The view that this could be the last interest rate step in the Eurozone is becoming more firmly established," notes Tim Oechsner, Senior Trader and Capital Market Strategist at Steubing AG. However, Lagarde had also left the door open for further hikes. "So there is no guarantee that interest rate hikes will end."
Yields slightly up
Until Thursday, bond trading was quiet: "The wait for the ECB's interest rate decision shaped trading and led to restraint," reports Beate Mägerle from Walter Ludwig Wertpapierhandelsbank. "It was a typical central bank week, there was a lack of impetus before the meeting," Oechsner also explains. "Everyone was waiting for the results, which were more unclear than they had been for a long time."
However, the decision did not trigger any major movements. Yields rose slightly in a weekly comparison. Ten-year Bunds were yielding 2.62 per cent on Friday morning, up from 2.58 per cent a week ago. Now the focus is on the USA: the markets continue to assume a pause for the upcoming Fed meeting next week, as Deutsche Bank explains. "The implied probability of this remains unchanged this morning at just under 98 per cent."
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Sixt, Porsche, Eon - well-known names are on the rise
Among the corporate bonds with the highest turnover are, as last week, papers of the car rental company Sixt with a maturity of 2027 and a current yield of 4.15 per cent (DE000A351WB9), as Mägerle reports. She also sees increased demand for bonds from VW (XS1893631769), Porsche Automobil Holding (XS2643320018) and RWE (XS2584685031) maturing in 2026, 2027 and 2029 with current yields of 3.73 per cent, 4.03 per cent and 3.90 per cent.
The Eon bond issued at the end of August with a coupon of 3.75 per cent until 2029 (XS2673536541) is also sought after, Oechsner reports, as is the Porsche Automobil Holding bond with a coupon of 4.25 per cent until 2030 (XS2643320109) brought to the market in July, as well as older bonds from Siemens (DE000A1UDWN5).
Some calm has returned to the Mittelstand segment. "There is no new bad news," explains Marcus Mielert of Oddo BHF. At the moment, he says, everything is looking at China's real estate market, which continues to be under heavy pressure. According to Oechsner, the bond of the Dutch solar company Photon Energy (DE000A3KWKY4), which came under heavy selling pressure in August, continued to record turnover of 66 to 69 percent.
Not just for sweet tooths: Katjes convinces and adds to its gains
The new five-year corporate bond of the confectionery manufacturer Katjes (NO0012888769), which was increased from 100 to 115 million euros, was really well received. The interest rate was finally set at 6.75 per cent - in the lower range of the interest rate range mentioned at the beginning. The company plans to call and redeem the old bond (<DE000A2TST99>), which was not issued in the exchange offer, early on 12 November 2023.
The new Sartorius bond with four tranches with maturities of 3 to 12 years and a total volume of 3 billion euros was more than six times oversubscribed, the Goettingen-based life science group reported. At Steubing, the bond maturing in 2029 is traded at 4.375 percent (XS2676395077) and the one maturing in 2032 at 4.5 percent (XS2676395317) - but with a minimum investment of 100,000 euros. This also applies to new Deutsche Bahn securities with 3.5 per cent until 2027 (XS2689049059).
The new bond of the Mannheim-based raw materials and mining company Deutsche Rohstoff can still be subscribed to until 25 September. The term runs until 2028, the coupon is 7.5 percent (DE000A3510K1). A volume of up to 100 million euros is planned, with a minimum investment of 1,000 euros.
by: Anna-Maria Borse, 15. September 2023 © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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