The bond has a nominal amount of 500 million euros and will pay a fixed interest rate of 2,025% per year until May 5, 2027 (redemption date). As of this date, the bond will carry a fixed rate equivalent to a 7-year swap plus a margin of 2,663% until February 5, 2030. From this date until May 5, 2047 the margin will be 2,913% and from then it will be 3,663%.
Chris Iggo (Axa IM) | Suddenly the Brexit stakes have been raised. Prime Minister Johnson has made a call that convincing the world that he is prepared to leave the EU without a deal and that he is prepared to take risks with democratic and parliamentary convention are worth it if it results in the UK and the EU reaching a compromise withdrawal agreement before October 31st. It is a gamble and the tactics are being challenged by both political and public responses. Yet an alternative course of action is hard to see given the lack of credible anti-no-deal strategies so far. If Johnson’s bet pays off, the UK leaves the EU with a deal, sterling rallies, and confidence to the economic outlook can return. If not, economic and political chaos will continue and probably worsen. I said I would adhere to “Sober September” – that might prove to be very challenging!
Markus Allenspach (Julius Baer) | We maintain our Overweight on EUR low-grade bonds against the backdrop of low money-market rates and remote recession risks. Moreover, we share the view of the market that the odds for a new corporate-sector purchase programme of the European Central Bank are rising, which could additionally lift bond prices.
Link Securities | We highlight the negative impact that the new conflict between the European Commission (EC) and the populist government of Italy is having on the European securities markets and on the euro. Rome has not taken the necessary measures to contain the public deficit, which it will lead to a further increase in Italian public debt, whose weight could surpass 135% of GDP in two years.
Renta 4 | Telefónica has announced the result of the repurchase of the 2 hybrid bonds which it issued on 5 March. The nominal aggregate value which Telefónica will accept to purchase the bonds has reached 934.7 million euros, of which 586.5 million euros corresponds to the bond with maturity in December 2019 and 348.2 million euros with maturity in March 2020.
Ofelia Marín- Lozano | The intervention of the ECB in sovereign bond markets stopped the rise in the internal rate of return on the periphery countries bonds, Spain and Italy. But it didn’t stop the flight to what had become the main asset of safety, German bonds, whose IRR continued falling until the nominal returns were negative.
Christmas came early this year in France as President Emmanuel Macron handed out gifts to his constituents like an end of the year bonus and a €100 increase of the minimum wage, explicitly not paid by employers. However, the European Union may not join in the celebrative Christmas conga as this spending spree will send the French budget deficit far north of what European budget rules allow.
Neil Dwane (Allianz) | The response of central banks to the financial crisis 10 years ago may have saved the world from a devastating depression, but it also created a host of unforeseen effects – from more indebtedness to more economic inequality. Looking back at what we got right – and what went wrong – what lessons can we take away for the future?
US corporate debt rose to 45% of GDP at the peak of the Great Financial Crisis that began in 2008 , the same level it reached at the height of the dot.com bubble in 2000/01