Issuance activity: Tomorrow, MinFin is scheduled to auction CZK3.0bn of 2034 bonds, CZK4.0bn of 2037 bonds and CZK2.0bn of 2038 floaters. In mid-May, the MinFin began accepting orders for the new retail CZGBs. By Monday, the quantity demanded had already reached CZK44.3bn. Consequently, we have lowered our estimate of this year's gross CZGB issuance to CZK400bn, which is at the lower end of the CZK400–500bn interval presented in the MinFin’s debt strategy. However, with CZK119.4bn of CZGBs sold in primary auctions, and an additional CZK50.6bn of taps and CZK38.1bn of switches conducted on the secondary market ytd, the issuance pace does not need to slow materially in 2H26. Overall, despite the success of the retail bonds so far, this will likely not be enough to compensate for the increase in the state budget deficit in 2027.

Issuance activity: Tomorrow, MinFin is scheduled to auction CZK3.0bn of 2034 bonds, CZK4.0bn of 2037 bonds and CZK2.0bn of 2038 floaters. In mid-May, the MinFin began accepting orders for the new retail CZGBs. By Monday, the quantity demanded had already reached CZK44.3bn. Consequently, we have lowered our estimate of this year's gross CZGB issuance to CZK400bn, which is at the lower end of the CZK400–500bn interval presented in the MinFin’s debt strategy. However, with CZK119.4bn of CZGBs sold in primary auctions, and an additional CZK50.6bn of taps and CZK38.1bn of switches conducted on the secondary market ytd, the issuance pace does not need to slow materially in 2H26. Overall, despite the success of the retail bonds so far, this will likely not be enough to compensate for the increase in the state budget deficit in 2027. Although no details of the 2027 budget are likely to be released until the end of August, the easing of fiscal rules has already been approved by the lower house of Czech parliament. This opens the door to a deeper public finance deficit of over 3% by extending the escape clause to most infrastructure investment (investment transfers from the state budget to the State Fund for Transport Infrastructure reached CZK94bn last year, i.e. 1.1% of GDP).

Market situation: Fixed income securities continue to follow headlines about the Middle East, with CZGB ASWs still remaining tighter than the 90D average. On the Czech data front, Czech PPI rose 1.4% mom in April, 0.5pp above BBG consensus.  Prices of construction materials also rose sharply, by 2.4% mom in April and by nearly 5% yoy. Combined with the continued rapid growth in real estate prices and robust consumer demand, it is therefore likely that core inflation will exceed the 3% yoy during the remainder of the year.

Rates outlook: We continue to expect interest rates to remain on hold in the near term given the CNB willingness to react only to second round effects (core inflation). However, with more significant oil price shock and easier fiscal policy risks of our April forecast both starting to materialize, the risk of a rate hike later this year is increasing.

In the first quarter of this year, Colt CZ reported the best results in the company’s history. The acquisition of Synthesia Nitrocellulose and Synthesia Power (NCL) in January contributed significantly to this performance. This was further complemented by organic growth in traditional operations. EBITDA increased by +72.1% yoy, reaching CZK2.1bn, which was +9.8% above market consensus. The margin increased by +6.5pps to 28.5%, primarily due to the integration of the highly profitable new business. Colt’s management reiterated its guidance. The integration of NCL appears to be key to the company’s overall performance and future growth. Colt reported very strong results, well above estimates.

In the first quarter of this year, Colt CZ reported the best results in the company’s history. The acquisition of Synthesia Nitrocellulose and Synthesia Power (NCL) in January contributed significantly to this performance. This was further complemented by organic growth in traditional operations. EBITDA increased by +72.1% yoy, reaching CZK2.1bn, which was +9.8% above market consensus. The margin increased by +6.5pps to 28.5%, primarily due to the integration of the highly profitable new business. Colt’s management reiterated its guidance. The integration of NCL appears to be key to the company’s overall performance and future growth. Colt reported very strong results, well above estimates.

Colt's total revenue reached CZK7.3bn in 1Q26. This represents a +32.7% yoy increase. The firearms segment grew by +23.3% and accounted for +47.6% of the total. However, due to lower margins (14.6%), its share of total EBITDA was only 24.4%. Although firearms sales declined, revenue increased yoy due to the product mix. There are signs of recovery in the U.S. commercial market, which is crucial for the firearms industry. Deliveries to ML&E also helped. The split between the commercial sector (49%) and the armed forces (51%) is nearly equal. The ammunition segment declined by 14.2% yoy due to a drop in sales from the Czech ammunition initiative. Ammunition accounted for 31.5% of total revenue. However, with a margin of 33.6%, the ammunition segment accounted for 37.1% of total EBITDA. Unsurprisingly, the European market dominates this segment at 83%. Deliveries to ML&E (55%) were slightly higher than those to the commercial market (45%). The new energetics segment (NCL) accounts for 20.9% of Colt’s revenue (+25.3% yoy). This sector's high margin of 52.5%, however, had a significantly positive impact on Colt’s overall margin. NCL generated 38.5% of total EBITDA. Total EBITDA reached CZK2.1bn in 1Q26, which is +9.8% above the market consensus. Yoy growth reached a high of +72.1% due to the NCL acquisition and organic growth. Excluding NCL, organic growth was +5.9% yoy. The European market is crucial for Colt; it now generates 58% of total revenue there. Together with revenue from North America (22.6% from the U.S. and 12.4% from Canada), this accounts for approximately 93% of total revenue. Net profit reached CZK951m in the first quarter of 2026, a +73.9% yoy increase. 

Leverage, as measured by net debt to EBITDA, was 2.2x in 1Q26. This is an increase from 1.8x at the end of 2025. The increase in leverage is due to the acquisition of NCL earlier this year.

2026 Outlook: Colt reiterated its full-year targets. The company expects EBITDA to be CZK7.4-8.2bn, with revenue CZK30-33bn. The reported figures for 1Q26 represent 26.7% of the full-year EBITDA target and 23.2% of the revenue target.