Bonds: “ECB delivers as expected”
The round of interest rate cuts has begun. However, there were no major market reactions following yesterday's ECB interest rate cut. Among corporate bonds, bonds from car manufacturers and suppliers are currently having a hard time.
13 September 2024. FRANKFURT (Börse Frankfurt). After the interest rate cut is before the interest rate cut: yesterday, Thursday, the ECB decided on the key interest rate, with the US Federal Reserve meeting scheduled for next Wednesday. As expected, the ECB has cut interest rates once again: the deposit rate, which acts as the key interest rate, by 25 basis points to 3.50 percent, and the main and marginal lending rates by 60 basis points each. “In view of the increasing confidence that the inflation target will be achieved, the interest rate cut was certainly appropriate,” comments Ulrike Kastens from DWS.
ECB chief Lagarde avoided making any concrete statements on further interest rate developments. The ECB also updated its inflation forecasts. They remain unchanged for overall inflation, but the central bankers now expect slightly higher rates for core inflation in 2024 and 2025. “The ECB meeting has not left any traces on the market,” reports Arthur Brunner, who trades bonds for ICF Bank.
Interest rates fall slightly
Ten-year German government bonds are yielding 2.15 percent on Friday morning after 2.17 percent a week ago. US Treasuries of the same maturity are currently yielding 3.65 percent after 3.71 percent last Friday.
The US Federal Reserve is also expected to cut interest rates by 25 basis points. “Inflation rates are falling again and the labor markets have eased,” says DWS US economist Christian Scherrmann. He expects the Fed to cut interest rates by 25 basis points not only next week, but also at all remaining meetings this year.
VW crisis and BMW recall weigh on the market
In corporate bond trading, the skepticism regarding carmakers continues, as Rainer Petz from Oddo BHF reports. “Normally we see almost only purchases, for example for the many VW bonds,” explains the trader. Now there are also sales, albeit not on a large scale. The BMW recall due to defective Continental brakes is also weighing on automotive suppliers, as Brunner reports. Neue ZWL Zahnradwerk Leipzig (DE000A3MP5K7) and Paragon (DE000A2GSB86), for example, have been affected by losses. “ZWL has delivered good figures.” At Paragon, a change in the CFO position also played a role, as Brunner notes.
Gregor Daniel from Walter Ludwig Wertpapierhandelsbank reports purchases for the Deutsche Lufthansa bond issued at the beginning of the month with a term to 2028 and a coupon of 3.625 percent (XS2892988275) as well as an Eon long bond with 4.125 percent to 2044 (XS2791960664). He sees “isolated purchases” for a Mercedes-Benz bond with a 3.7 percent coupon maturing in 2031 (DE000A3LH6U5).
News from MTU, Mutares and Underberg
A bond from MTU Aero Engines with a coupon of 3.875 percent maturing in 2031 (XS2887896574) has been trading since today, as Daniel also explains. According to Brunner, there is a new senior secured bond with a variable interest rate from the investment company Mutares (NO0013325407). The interest rate is Euribor plus 6.25 percent and the bond matures in 2029. “Sales are good.”
According to Daniel, a new bond from spirits manufacturer Semper idem Underberg (DE000A383FH4), known for brands such as Underberg, Asbach and Pitú, is expected to be available for subscription until September 25. The new bond matures in October 2030 and the coupon will be between 5.75 and 6.75 percent. The old bond maturing in November 2025 with a coupon of 4 percent (<DE000A2YPAJ3>) is to be redeemed early. “Investors can swap into the new bond, the coupon is much more attractive.”
From Anna-Maria Borse, 13 September 2024, © Deutsche Börse
About the author
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
Feedback and questions to redaktion@deutsche-boerse.com
Borse
Deutsche Börse 
