Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2032 bonds and CZK2.0bn of 2038 floaters. The updated April’s calendar indicates a total supply of CZK17.0bn of CZGBs, while the total issuance for 2Q remaining at CZK50.0bn. Overall, MinFin has sold CZK83.7bn of CZGBs in primary auctions, with an additional CZK50.6bn of taps and CZK38.1bn of switches on the secondary market year to date. The secondary market is therefore becoming increasingly significant this year, probably due to its higher flexibility amid heightened market volatility.

Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2032 bonds and CZK2.0bn of 2038 floaters. The updated April’s calendar indicates a total supply of CZK17.0bn of CZGBs, while the total issuance for 2Q remaining at CZK50.0bn. Overall, MinFin has sold CZK83.7bn of CZGBs in primary auctions, with an additional CZK50.6bn of taps and CZK38.1bn of switches on the secondary market year to date. The secondary market is therefore becoming increasingly significant this year, probably due to its higher flexibility amid heightened market volatility.

Market situation: Czech rates continue to follow trends in core markets, which are primarily driven by swings in sentiment caused by headlines about the conflict in the Middle East. As expected, Czech PPI rose by 1.5% mom in March due to higher energy prices. Although food industry prices rose slightly by 0.1% mom in March after seven months of decline, this, together with other indicators, does not imply significant upward pressure on final consumer food prices in the near term. However, the acceleration of construction material price growth and continued growth in construction work prices are likely to put upward pressure on imputed rent, contributing to the acceleration of core inflation in March (more information can be found here: https://bit.ly/CPI_Mar26_EN). CNB Board member Jan Kubíček and Deputy Governor Eva Zamrazilová both expressed no need to rush with monetary tightening.  Although they both admitted that a hike is the more likely next move, the central bank should not react to the primary effects of higher fuel prices, but rather closely monitor potential spill-overs to other segments of the consumer basket, as well as inflation expectations and wage demands. Moreover, they noted that some tightening has already been delivered by the recent rise in CZK IRS.

Rates outlook: Given that the CNB is relatively well positioned to navigate the oil price shock, we expect it to wait for more clarity rather than act pre-emptively at this stage. Rate hikes may only be on the table if there are significant second-round effects on other components of inflation. For now, we are keeping our call for CNB policy unchanged and therefore continue to expect interest rates to remain on hold until the end of the year.

Dividend

The CEZ Board of Directors is proposing to shareholders at the Annual General Meeting a dividend of CZK42 from last year’s profits. The proposal is in line with expectations and CEZ’s current dividend policy of paying out 60–80% of net profit. The dividend corresponds to a payout ratio of 80% and offers a gross yield of +3.5%.

In recent years, CEZ shares have traded for two more days after the AGM with dividend rights. This would suggest that the last day with dividend rights for 2025 will be Wednesday, June 3.

Restructuring

The agenda for the General Meeting will include an item regarding the company’s restructuring. CEZ is proposing the transfer of the customer segment to a new subsidiary under CEZ's control. The new company, expected to be named CSSC, will handle the distribution, sale, and trading of electricity and natural gas, as well as services and telecommunications. The transaction is expected to be completed by the end of the first quarter of 2027.

Dividend

The CEZ Board of Directors is proposing to shareholders at the Annual General Meeting a dividend of CZK42 from last year’s profits. The proposal is in line with expectations and CEZ’s current dividend policy of paying out 60–80% of net profit. The dividend corresponds to a payout ratio of 80% and offers a gross yield of +3.5%.

In recent years, CEZ shares have traded for two more days after the AGM with dividend rights. This would suggest that the last day with dividend rights for 2025 will be Wednesday, June 3.

Restructuring

The agenda for the General Meeting will include an item regarding the company’s restructuring. CEZ is proposing the transfer of the customer segment to a new subsidiary under CEZ's control. The new company, expected to be named CSSC, will handle the distribution, sale, and trading of electricity and natural gas, as well as services and telecommunications. The transaction is expected to be completed by the end of the first quarter of 2027.

This could lead to the sale of up to 49% of CSSC. CEZ plans to retain a 51% stake. The board of directors will decide on the form of the sale. This could involve, for example, an IPO or a direct sale.

From our perspective, this is an expected step toward state control of CEZ’s generation activities. According to government officials, the buyout of minority stakes in the generation segment should be financed by CEZ itself without a significant impact on CEZ’s finances.

The EBITDA of the aforementioned CEZ segments, which are to be spun off, accounted for approximately 39% of the total in 2025, or CZK53bn in absolute terms.