Issuance activity: Tomorrow, MinFin is scheduled to auction CZK4.0bn of 2034 bonds, CZK4.0bn of 2035 bonds and CZK2.0bn of 2037 bonds. Although this is the first primary auction, the 2026 issuance campaign has already begun on the secondary market, with tap sales totalling CZK19.9bn. The headline cash deficit of the state budget for 2025 was CZK291bn versus a budget plan of CZK241bn. This was probably due to a delay in receiving EU funds. Adjusting for EU funds, the deficit exceeded the budget by roughly CZK9bn. The draft budget for 2026 is still being prepared and is to be discussed by the government on Monday 26 January. The finance minister has already indicated that 'keeping the deficit below CZK 300 billion will be difficult', while also pledging to keep the public finance deficit below 3% of GDP. The MinFin’s new strategy does not contain any concrete assumptions regarding the state budget, but indicates the total gross CZGB issuance will be CZK400–500bn.

Issuance activity: Tomorrow, MinFin is scheduled to auction CZK4.0bn of 2034 bonds, CZK4.0bn of 2035 bonds and CZK2.0bn of 2037 bonds. Although this is the first primary auction, the 2026 issuance campaign has already begun on the secondary market, with tap sales totalling CZK19.9bn. The headline cash deficit of the state budget for 2025 was CZK291bn versus a budget plan of CZK241bn. This was probably due to a delay in receiving EU funds. Adjusting for EU funds, the deficit exceeded the budget by roughly CZK9bn. The draft budget for 2026 is still being prepared and is to be discussed by the government on Monday 26 January. The finance minister has already indicated that 'keeping the deficit below CZK 300 billion will be difficult', while also pledging to keep the public finance deficit below 3% of GDP. The MinFin’s new strategy does not contain any concrete assumptions regarding the state budget, but indicates the total gross CZGB issuance will be CZK400–500bn.

Market situation: CZK market interest rates have declined in January, with headline CPI close to 2% target and below the CNB forecast (more here: https://bit.ly/CPI_Dec25_EN). Moreover, CNB recently eased its previously hawkish rhetoric by adjusting the balance of risks from ‘pro-inflationary’ to ‘balanced’ at the December meeting. Meanwhile, core inflation (services) remains elevated, and the upcoming dip in headline CPI will be induced by an administrative measure that will only temporarily reduce inflation. Furthermore, monthly indicators suggest that the Czech economy’s growth momentum remains strong in 4Q25. CZGBs have become relatively cheaper recently, probably due to fiscal risks and the ongoing rebuilding of the term premium in EUR space.

Rates outlook: Overall, we expect the repo rate to remain at 3.5% for an extended period. However, with headline inflation temporarily falling below the 2% target, financial markets may continue to promote the 'dovish CNB' narrative in the near term, thereby pushing short-end CZK market rates down. Later this year, we believe that the new government's fiscal stimulus will gradually counteract this by fuelling core inflationary pressures.

Colt CZ has announced the completion of its acquisition of a 51% stake in Synthesia Nitrocellulose (SNC). The transaction also includes the purchase of a 51% stake in Synthesia Power (SP). Colt CZ may acquire the remaining 49% under pre-agreed terms within the next few years. The acquisition was announced around the middle of last year.

The total acquisition price is CZK10b, consisting of CZK5.5bn in cash and 6,174,214 new Colt shares at a price of CZK732 (180-day VWAP) per share. Kaprain, the selling company, gained a 9.86% stake in Colt, becoming its third-largest shareholder.

SNC should significantly improve Colt's financial results. SNC's EBITDA of approximately CZK2.5bn accounts for 53% of Colt's 2025 target. The transaction multiple is 8.2x EV/EBITDA. Compared to Colt's multiple of about 11x EV/EBITDA, the transaction price is favourable.

Following the acquisition of Sellier&Bellot, the purchase of Synthesia Nitrocellulose is another significant transaction that will improve Colt's financial performance and strengthen its vertical integration. SNC is a key supplier for Colt's ammunition business.

Colt CZ has announced the completion of its acquisition of a 51% stake in Synthesia Nitrocellulose (SNC). The transaction also includes the purchase of a 51% stake in Synthesia Power (SP). Colt CZ may acquire the remaining 49% under pre-agreed terms within the next few years. The acquisition was announced around the middle of last year.

The total acquisition price is CZK10b, consisting of CZK5.5bn in cash and 6,174,214 new Colt shares at a price of CZK732 (180-day VWAP) per share. Kaprain, the selling company, gained a 9.86% stake in Colt, becoming its third-largest shareholder.

SNC should significantly improve Colt's financial results. SNC's EBITDA of approximately CZK2.5bn accounts for 53% of Colt's 2025 target. The transaction multiple is 8.2x EV/EBITDA. Compared to Colt's multiple of about 11x EV/EBITDA, the transaction price is favourable.

Following the acquisition of Sellier&Bellot, the purchase of Synthesia Nitrocellulose is another significant transaction that will improve Colt's financial performance and strengthen its vertical integration. SNC is a key supplier for Colt's ammunition business.