Issuance activity: Tomorrow, MinFin is scheduled to auction CZ5.0bn of 2032 bonds, CZK3.0bn of 2034 bonds and CZK1.0bn of 2037 bonds. We estimate that almost 33% of CZGB’s annual gross issuance has been covered so far this year. However, we see a risk, that the state budget deficit could eventually exceed the planned CZK252.0bn as it already reached CZK153.1bn ytd in April. All in all, we think it is still unlikely that the pace of issuance will ease over the year.

Issuance activity: Tomorrow, MinFin is scheduled to auction CZ5.0bn of 2032 bonds, CZK3.0bn of 2034 bonds and CZK1.0bn of 2037 bonds. We estimate that almost 33% of CZGB’s annual gross issuance has been covered so far this year. However, we see a risk, that the state budget deficit could eventually exceed the planned CZK252.0bn as it already reached CZK153.1bn ytd in April. All in all, we think it is still unlikely that the pace of issuance will ease over the year.

Market situation: At its 2nd May meeting, the CNB cut the repo rate by 50 bps in line with consensus. The press conference had a rather hawkish tone (more in the special report here: https://bit.ly/CNB_May24_EN). CZK IRS as well as CZGB yields shot up yesterday after surprisingly strong Czech CPI data for April, which accelerated to 2.9% yoy (vs. 2.4% yoy expected). However, we see the message from Czech April inflation as rather mixed. Core prices rose 0.1% mom NSA in line with our and the CNB’s forecast, easing to 2.7% mom SA annualised from 3.8% the previous month, while the pro-inflationary surprise was mainly concentrated in volatile food prices. More on April inflation in the report: https://bit.ly/CPI_Apr24_EN.

Rates outlook: We expect two more 50bp cuts at the June and August meetings. For September, November and December, we forecast standard 25bp cuts. We therefore see the repo rate at 3.5% at the end of the year, which should also be a terminal level for this cycle. You can read more in our April Quarterly Czech Economic Outlook: https://bit.ly/CEO_2Q24_EN.

Colt CZ announced that it has completed the acquisition of 100% of the shares of Sellier & Bellot. Colt is acquiring a truly strategic asset that will complement its portfolio.

As expected, the transaction price consists of 350m USD (CZK7.96 billion) in cash and the issuance of 13,476,440 new Colt CZ shares. The new shares were issued on May 16 at a price of EUR24.1066 (CZK595.8, or CZK8bn in total). S&B will also be consolidated as of May 16.

We estimate that the S&B acquisition is valued at about 9x EV/EBITDA. This is slightly below Colt's multiple.

Colt's leverage is expected to increase to 2.6x (net debt / EBITDA) following the acquisition.

Colt CZ announced that it has completed the acquisition of 100% of the shares of Sellier & Bellot. Colt is acquiring a truly strategic asset that will complement its portfolio.

As expected, the transaction price consists of 350m USD (CZK7.96 billion) in cash and the issuance of 13,476,440 new Colt CZ shares. The new shares were issued on May 16 at a price of EUR24.1066 (CZK595.8, or CZK8bn in total). S&B will also be consolidated as of May 16.

We estimate that the S&B acquisition is valued at about 9x EV/EBITDA. This is slightly below Colt's multiple.

Colt's leverage is expected to increase to 2.6x (net debt / EBITDA) following the acquisition.