Week of 30/07/2018

Primary market: The euro activity picked up last week, with a total issuance volume of €4bn vs €1.95bn. The ESM was the only issuer who emerged on the market, due to the slow er activity during summer holidays . The issuer placed €4bn at 5Y at ms-19bp. The final NIP w as around 6bp. The order book closed at €9bn, which corresponds to a x2.3 book to cover ratio . Following this benchmark, the ESM has already completed 85% of its 2018 funding programme. Secondary market: Activity remained quiet with main interests on the buy side for new issuances, including the new ESM 5Y benchmark, which already tightened vs swap by 3/4bp. Otherwise, a few buying flows were observed on French agencies. APP: The ECB decreased its weekly net purchases to €6.9bn within the APP during the last week of July , compared to €11.2bn the previous week. Most of the purchases were achieved under the PSPP, whose share reached 92% of the APP (vs 62.6% previously) but in nominal terms, the amount bought decreased from €9bn to €6.3bn. The most negatively impacted programme was the CBPP3 since the ne t purchase dropped to negative territory at -€220m (from €1.25bn previously). As result, €22.9 bn have been bought by the ECB to reach its monthly target of €30bn. Thus, the ECB achieved c . 76 % of its target as at July 20 th . Other news: Last Friday, groupe SNCF published semi-annual results penalized, without any surprise, by the 37 days of strike against the French railway reform. Thus, this strike cost €790m , including €160m related to commercial gestures towards customers. This corresponds to a cost of €21m per day of strike, in line with the level that was upfront estimated by the group.  Activity declined by 3.3% compared to H1 2017 and reached €16bn while net income fell to - €762m from €119m in H1 2017. It should be noted, however, that productivity gains, in the region of €330m, were achieved and contributed to somehow offset the negative results. In details, recurring net results of SNCF Mobilités and Réseau amounted respectively to -€90m (vs €294m) and -€493m (-€182m). No impact on spreads was observed. We want to inform our readers that there will be no publication during August for the summer break . We wish you nice holidays ahead!