Rheinmetall is preparing its first public bond in nearly 16 years, a €500 million unsecured five-year note that underscores the breakneck pace of Germany’s biggest defence contractor. The Düsseldorf-based company is negotiating with investors, with Moody’s expected to assign a “Baa1” investment-grade rating to the deal. The move comes as the group’s order backlog swelled to €73 billion by spring, and management forecasts new orders worth roughly €80 billion for the full year.
The capital-raising effort arrives amid a pronounced disconnect between the long-term growth narrative and near-term market jitters. While Barclays recently reiterated its “Overweight” call with a €2,035 price target, and both Kepler and Citigroup maintain buy recommendations, a growing chorus of sell-side firms has slashed valuations. UBS delivered the most aggressive cut, reducing its target by €600 to €1,600, though analyst Sven Weier kept his buy rating. Jefferies lowered its target to €1,890, while Barclays held steady at the higher end.
On the trading floor, the stock closed Friday at €1,221.40, having shed roughly 39% from its all-time high and nearly 24% since the start of the year. Chart watchers point to stiff resistance around the €1,240 level, where the shares have repeatedly failed to break through in recent sessions. A relative strength index above 85 suggests the stock is overheated in the short term, dampening hopes of a swift recovery. Meanwhile, rival Hensoldt eked out modest gains over the same period, a divergence that market participants attribute to its more defensive positioning.
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Compounding the pressure, a structural shift in the defence landscape is gathering pace. Major automakers including Mercedes-Benz, VW and BMW are muscling into the sector — Mercedes already supplies military trucks to the Bundeswehr. Separately, KNDS is exploring the use of automotive factories for tank production, threatening to erode Rheinmetall’s established market share. These competitive inroads coincide with a worsening macro backdrop: the energy price shock from the Iran conflict is weighing heavily on German industry.
Nevertheless, the company is forging ahead on multiple fronts. Together with Deutsche Telekom, Rheinmetall is developing a drone-defence shield to protect critical infrastructure in Germany. CEO Armin Papperger is counting on second-quarter orders worth €20 billion, including armoured vehicle programmes in Italy and Romania as well as new frigate contracts. These deals need to land on schedule to ensure the bond issue is placed smoothly.
A flurry of geopolitical events in the coming days could provide a catalyst — or further uncertainty. On 28 May, industry leaders gather in Magdeburg to discuss Ukraine’s reconstruction, followed by the East German Economic Forum from 31 May, which will focus on defence investments. If the stock cannot muster a decisive move above the €1,240 resistance amid this news flow, additional selling pressure may be in store.
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