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ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Nadège Tillier
  • Suvi Platerink Kosonen

Coffee, Croissants & Credit/E.ON

Utilities: E.ON plans to acquire Innogy's remaining minority shares, bonds now fairly priced

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Nadège Tillier

Coffee, Croissants & Credit/BT Group and KBC

Fitch maintains BT Group at BBB; outlook stable

ING
Nadège Tillier

Schiphol/Best value vs peers despite investment peak

Schiphol Nederland BV operates the Amsterdam airport and Dutch regional airports such as Rotterdam - The Hague, Eindhoven and Lelystad. The group is rated A1/A+, and has an excellent business risk profile. The Dutch government owns 69.8% of the group, the municipality of Amsterdam 20%, Rotterdam 2.2% and Aéroport de Paris 8%. The company reported robust 1H19 financial numbers and despite weaker credit metrics, the company's profile remains strong enough for rating requirements. Schiphol's bonds offer some attractiveness compared to direct peers, although they now yield negative except for the ...

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Maureen Schuller
  • Nadège Tillier
  • Suvi Platerink Kosonen

Euro Credit Supply/August saw a flood of issuance in the last week

Supply, in general, has remained on par with previous month; Significant level of supply was rushed in during the final week of the month; Low and negative yields will likely result in record breaking September issuance

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Nadège Tillier

Coffee, Croissants & Credit/Flood of New Issuance, Telia and Schiphol

Last week of August saw a flood of new issuance

ING
Nadège Tillier

Alliander/1H19 results: valuation in line with quality

Alliander, the largest electricity and gas distribution company in the Netherlands with c.35% of market share based on connections, held an analyst conference call today. The company published its 1H19 results earlier in July and issued a new green bond of €300m with a 13 year tenor in June. The new Dutch Climate Agreement aims for a 49% CO2 reduction by 2030. The agreement's targets have a significant impact on Dutch electricity and gas networks. Alliander has to give priority to network digitalisation and smart meters. The company will need to install heat grids as well and cost savings will...

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Maureen Schuller
  • Nadège Tillier
  • Suvi Platerink Kosonen

Bite Size Strategy/The case for flattening, expect more tightening

As we edge ever closer to the ECB meeting next Wednesday, the perfect funding environment has tempted many issuers out of the summer snooze to lock in historically low yields. Our economists expect a depo cut to -0.6%, TLTRO tiering and an announcement for APP to the tune of €30bn, we believe up to €10bn could be in the form of their beloved private sector CSPP (c.€6bn/ month corporate) which could well include senior preferred banking debt (for another €3-4bn). In this light, naturally, we favour eligible debt.

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Nadège Tillier

Coffee, Croissants & Credit/Iberdrola and Utilities green bonds

Iberdrola completes stake disposal in offshore East Anglia. Credit neutral. We prefer Naturgy's mid-curve. Utilities green bonds: there is more to green bonds than just a marketing tool

ING
Nadège Tillier

Utilities green bonds/There is more to green bonds than just a marketing tool

With c.€19bn of green bonds issued in the first eight months of 2019, utilities are set to break their record of €21bn issuance for the full year of 2017. A number of utilities celebrated their first green instrument in 2019: A2A, EDP, E.ON and Vattenfall. A number of utilities returned to the green bond market: Duke Energy, Engie, EnBW, Enel, Hera, Iberdrola, MidAmerican Energy and Orsted. Since 2014, utilities across the globe have issued c.€77bn and have been the most active corporate sector. This makes sense when we know that the Energy sector is responsible for the largest part of the gre...

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Nadège Tillier

Coffee, Croissants & Credit/NIBC and Vodafone

Stable earnings, but the TRIM to hit its capital ratios. NIBCAP2 4/24 vulnerable to supply

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Maureen Schuller
  • Nadège Tillier
  • Suvi Platerink Kosonen

Bite Size Strategy/Still in the value zone - with corrected e-mail cover text

We remain bullish after seeing considerable widening earlier in August creating value with an impending CSPP2 just around the corner. Spreads started to tighten slightly last week and we see curves beginning to flatten. However, as we steer towards a generally busy supply month, and with ever more negative yields, we will see the majority of new issuance target the longer end of the curve, as positive yields drive demand. All in all, supply pressure will fail to stop the CSPP2 squeeze. $ credit underperformed € credit continuing a recent trend, one we expect to continue.

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Maureen Schuller
  • Nadège Tillier
  • Suvi Platerink Kosonen

Bite Size Strategy/Still in the value zone

We remain bullish after seeing considerable widening earlier in August creating value with an impending CSPP2 just around the corner. Spreads started to tighten slightly last week and we see curves beginning to flatten. However, as we steer towards a generally busy supply month, and with ever more negative yields, we will see the majority of new issuance target the longer end of the curve, as positive yields drive demand. All in all, supply pressure will fail to stop the CSPP2 squeeze. $ credit underperformed € credit continuing a recent trend, one we expect to continue.

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Nadège Tillier

Coffee, Croissants & Credit/Negative yields, Total SA

Consequences of negative yields to new issuance

ING
Nadège Tillier

Elia/The long end of the curve remains attractive

The iBoxx IG EUR Utilities index shows that spreads for the sector have tightened by an average of 51bp since 1 January 2019. The shortest dated bonds of Elia (the ELIASO1.75 5/24 and the ELIASO1.75 1/26) followed the rally with a 46bp tightening. From a relative point of view, we consider these two bonds as trading rather expensive now. Elia's full curve is very steep, steeper than direct peers. There remains plenty of value in the ELIASO3.25 4/28 trading 35bp wider than the ELIASO1.75 1/26. The ELIASO3 4/29 (size €350m) trades at ASW+90bp, or at the same level as a number of Italian regulate...

ING
Nadège Tillier

Enexis/Room for capex, bonds now fairly priced

Enexis is the second-largest gas and electricity distribution company in the Netherlands, with 31% of total connections. For the first six months of 2019, 92% of its revenues were derived from regulated electricity and gas distribution services. Enexis' 1H19 reported results were in line with 2018. Revenue and EBITDA were mostly flat at €738m and €369m, respectively. Based on the last twelve months, net leverage increased to 3.2x vs 2.9x at YE18 with net debt at €2.5bn (vs €2.3bn at YE18). With a credit curve trading slightly outside its direct peer Alliander, we consider Enexis' bonds to be n...

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Job Veenendaal
  • Nadège Tillier
  • Suvi Platerink Kosonen

Coffee, Croissants & Credit/Vodafone

TMT Fitch downgrades Vodafone to BBB; no impact on spreads

ING
Nadège Tillier

Vier Gas/Limited headroom, spread upsides limited too

Vier Gas' credit metrics have been skewed towards the bottom of Standard & Poor's financial requirements and we think that pressure on ratios will continue. Capital expenditure needs and higher dividends since 2018 may require extra funding. Vier Gas has very limited headroom within its A- rating with an FFO/net debt at c.13%. Its spread curve is relatively expensive, along with other A- rated regulated utilities.

ING
Nadège Tillier

E.ON and Innogy/Regulatory and UK pain will continue

E.ON and Innogy reported their interim report. E.ON management expects the European anti-trust authorities to provide their decision on the merger with Innogy in September 2019. The company has offered remedies to speed up the process. Meanwhile, 1H19 results suffered from a weaker UK retail market and higher pension provisions. The remuneration on German networks is lower since the beginning of the year. Remuneration on Swedish networks is planned to be drastically reduced in the period 2020-2023. Despite the fact that the companies' share price resisted after the expected weak results, we co...

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Job Veenendaal
  • Nadège Tillier
  • Suvi Platerink Kosonen

Coffee, Croissants & Credit/Carlsberg and Innogy

Benelux Bank Green Bonds: Looking for green value

ING
Hendrik Wiersma ...
  • Jeroen van den Broek
  • Job Veenendaal
  • Nadège Tillier
  • Suvi Platerink Kosonen

Coffee, Croissants & Credit/KBC, Coca-Cola HBC, Deutsche Telekom and Fedex

KBC Group reports stable capital metrics, KBC bail-in senior provides an attractive pickup versus Rabobank

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