Bonds: Not fish, not meat
There is not much movement in government bonds at the moment, thanks to mixed news. On the other hand, there is a lot going on in corporate bonds, for example from Hertha BSC, Social Chain and Paragon. And Apple is coming onto the market with new bonds.
12 May 2023. FRANKFURT (Börse Frankfurt). Recession worries, the U.S. debt dispute, unrest in the banking sector on the one hand, easing interest rate pressure on the other: With the mix of burdening and supporting factors, the markets went sideways this week, including the bond markets. "There is currently no overriding major direction in trading," notes Tim Oechsner, who trades bonds for Steubing AG. "Neither optimists nor pessimists can really prevail." Ten-year German bunds are yielding 2.25 percent at midday Friday, about the same level as a week ago.
In the U.S., a possible recession is again a topic of discussion, and the pace of growth has already slowed significantly. In addition, the regional banks continue to cause concern, most recently PacWest. In addition, the debt dispute continues to smolder. Talks between Democrats and Republicans on raising the debt ceiling have now been postponed until early next week. "The clock is starting to tick a little louder until June, when Treasury Secretary Yellen says there could be problems with U.S. solvency," comments Deutsche Bank.
Interest rate hopes premature?
As far as interest rate hikes are concerned, it seems that the peak will soon be reached. The market is still pricing in just under two rate hikes of 25 basis points for the euro zone, and rate cuts of over 80 basis points for the US by the end of the year. DekaBank sees things somewhat differently, at least for the eurozone. "Market participants are already anticipating pronounced key rate cuts for the eurozone in the coming year," explains bond analyst Michael Ramon Klawitter. However, he said, market participants are focusing too much on the key interest rate expectations for the U.S. Federal Reserve. "They are underestimating the persistence of inflation in the euro area and the ECB's reaction to it."
Hertha: Suffering from impending loss of license
The top seller in the corporate bond business remains Grenke (XS2155486942) at ICF Bank, as Arthur Brunner notes. In addition, three issuers provided high turnover this week: "The threat of license withdrawal for Hertha BSC led to massive price movements in the bond." A week ago, the soccer club bond (SE0011337054) was still traded at 97 percent, in the meantime it was only 65 percent, on Friday morning 82 percent. "If it really came to the license loss, the bond would probably fail. That is therefore a very hot bet." The "Süddeutsche Zeitung" had reported that Hertha could be threatened with the withdrawal of its Bundesliga license by the German Football League in view of its strained economic situation.
Brunner
Social Chain unter Druck, Paragon gefragt
Federn lassen musste auch der Bond der The Social Chain AG (<DE000A3E5FE7>). Das E-Commerce-Unternehmen, hervorgegangen aus der TV-Show „Höhle der Löwen“ und derzeit von Löwen-Investor und Unternehmer Georg Kofler geführt, kriselt seit einiger Zeit. Der Aktienkurs, der vor anderthalb Jahren über 50 Euro gestiegen war, liegt jetzt bei nur noch 2,70 Euro. Die Anleihe wird aktuell bei 26 Prozent gehandelt. „Diese Woche kam einiges an Verkaufsordern rein, jetzt sieht es nach einer Bodenbildung aus“, meint Brunner.
Viel Umsatz gab es Brunner zufolge außerdem in der Anleihe des Autozulieferers Paragon (DE000A2GSB86). „Da stecken wohl die guten Zahlen zum ersten Quartal dahinter und der Verkauf der Software-Tochter an die Volkswagen-Softwaresparte Cariad.“ Zudem sei eine auf Schweizer Franken lautende Anleihe zurückgezahlt und das Volumen der noch bestehenden Anleihe reduziert worden.
UBM, Porsche, Telekom, VW and Eon popular
Things are quiet at Walter Ludwig Wertpapierhandelsbank at the moment. "There is no special, price-influencing corporate news for us this week," reports Gregor Daniel. He reports good turnover for bonds issued by Vienna-based real estate developer UBM Development: trending towards purchases for the one due 2025 with coupon of 2.75 percent (AT0000A2AX04), purchases and sales for the one due 2026 with coupon of 3.125 percent (AT0000A2QS11). Yields based on recent sales were 4.92 percent and 5.91 percent.
Oechsner of Steubing AG continues to see good turnover in the new Porsche bond with a coupon of 4.5 percent and maturity in 2028, which currently yields 4 percent (XS2615940215). A lot is also going on in Deutsche Telekom (XS1617898363), Volkswagen (XS1596735701, <XS2374595044) and Deutsche Bank (DE000DB7XJJ2) securities, all with maturities to a maximum of 2027 and yields between 3 and just over 5 percent. The exception is an Eon bond (XS0162513211) maturing in 2033, which is also heavily traded.
Apple with interest rates up to 4.85 percent
According to Brunner, there was a lot going on in the new issue market this week. First, Apple came to the market with new U.S. dollar bonds worth about $5 billion, which were also extremely well received. For three years, Apple pays 4.421 percent (US037833ES58), for five years 4 percent (US037833ET32), for seven years 4.15 percent (US037833EU05), for 10 years 4.3 percent (<US037833EV87<) and for 30 years 4.85 percent (US037833EW60). The minimum investment amount is US$2,000. The interest rates are thus still slightly above U.S. government bonds. "This is a point that has been eagerly debated in the market. Isn't Apple perhaps the more stable, more solvent debtor than the U.S. government?" wonders the FAZ in light of the squabbles over the U.S. debt ceiling.
The European Union also placed a bond, offering 2.75 percent until 2026 (EU000A3K4D82). The minimum investment here is 1,000 euros.
by Anna-Maria Borse, 12 May 2023, © Deutsche Börse AG
About the author
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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