A sigh of relief on the markets: There are many signs that the interest rate hikes are coming to an end. Many government and corporate bonds are popular, for example from Hungary and Italy as well as Katjes and Symrise. However, there is still bad news from the real estate sector.
17 November 2023. FRANKFURT (Börse Frankfurt). Bond traders are now definitely betting on an end to the interest rate hike. "The US inflation figures on Tuesday were the decisive event," explains Arthur Brunner from ICF Bank. The inflation rate in the USA for October fell to 3.2 percent, while 3.3 percent had been expected. In September it was still 3.7 percent. "Interest rates have probably peaked, so equities and bonds have risen significantly."
"The mood is generally positive - due to Tuesday's US consumer prices and hopes for the interest rate summit," reports Tim Oechsner, who trades bonds at Steubing AG. The meeting between US President Joe Biden and China's head of state Xi Jinping is also a topic - with the hope of a rapprochement. In addition, the oil price has fallen again and is dampening inflation concerns.
Gladly accepted: US dollar bonds
Ten-year German government bonds were yielding just 2.57 percent on Friday morning. A week ago it was still 2.71 percent. The yield on US government bonds with the same maturity is 4.45 percent, compared to 4.64 percent a week ago.
"Bonds are in demand across the board, especially risky ones, but also safe ones such as German government bonds or US Treasuries," explains Oechsner. Long-term Italian bonds maturing in 2051 with a coupon of 1.7 percent are somewhat on the shopping lists. "US dollar bonds in particular are being bought a lot due to the currently somewhat weaker US dollar," Brunner also notes. He sees a lot of buying for a Hungarian bond in US dollars maturing in 2041 with a 7.625 percent coupon (US445545AF36).
Öchsner
VW, Fresenius, RWE, Symrise and Katjes in demand
Symrise (DE000SYM7720) continues to be a hot topic in corporate bond trading, as Gregor Daniel from Walter Ludwig Wertpapierhandelsbank reports. "There is a lot of buying interest." At the current price, the fragrance and flavorings manufacturer's bond maturing in November 2025 offers a yield of 4.02%. According to Oechsner, the bond issued by Jung, DMS & Cie. at the beginning of the month (DE000A3514Q0) is also popular, offering just under 7 percent at the current price. Also in demand: shares of VW Leasing (XS2694872594), Fresenius (XS2698713695) and RWE (XS2523390271).
Brunner continues to see good turnover for the Katjes International bond, which is now trading at 104 percent (NO0012888769). Hep global (DE000A3H3JV5) has also recovered significantly. "There have been statements from the company that have calmed the market."
Real estate sector: Signa, Accentro and Preos suffer
Real estate companies are benefiting from the lower interest rates, as Rainer Petz from Oddo BHF points out. "However, some companies remain under pressure." The best-known case: Rene Benko's real estate group Signa. The bond maturing in 2026 with a coupon of 5.5 percent (DE000A3KS5R1) has lost two thirds of its value this month. However, private investors are unlikely to be affected due to the minimum investment amount of 100,000 euros.
In contrast, securities issued by Berlin-based residential real estate developer Accentro Real Estate (DE000A254YS5) have a minimum investment amount of EUR 1,000. The term had already been extended once. Last week, Accentro proposed a "new concept for mandatory special repayments and interest" to the creditors of the bond maturing in 2026. The bond is now only traded at 35 percent.
Petz
Brunner reports high turnover of just 0.001 percent for the bond of the ailing real estate group Preos Global Office Real Estate & Technology (DE000A254NA6). "A few buyers are on the way." Preos wants to restructure the convertible bond. If this is not successful, the company says it is threatened with insolvency. A mandatory conversion is now planned.
Subscription period for FCR and BDT still running
The subscription period for the BDT Media Automation bond (DE000A351YN0), a green bond maturing in 2028 with an 11.5 percent coupon, runs until November 28. According to its own statements, BDT is a leading global developer and manufacturer of data storage systems and a provider of system solutions for printing and automation technology. More information: www.boerse-frankfurt.de/bdt-media-automation-gmbh
The new bond from FCR Immobilien (DE000A352AX7) can also be subscribed until November 21. This runs until 2028 and offers 7.25 percent.
By Anna-Maria Borse, 17 November 2023 © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
Feedback and questions to redaktion@deutsche-boerse.com
Borse