Halister News

(Bloomberg) -- Carl Zeiss Meditec has upside potential in its microsurgery products and cash position for possible M&A, which are not priced in, HSBC says.

• Upgrades to buy vs hold; lifts PT to EU40 vs EU36
• Sees M&A potential in IOL lenses in the U.S. to gain faster market access
  • Notes most interesting asset in the market is Valeant’s Bausch & Lomb, though a $2b-$2.5b investment would be huge for Carl Zeiss and more on the aggressive side, would require a combination of debt and equity raising
• Says market share in laser technology will drive top-line growth

DATA

• Stock has risen 3.5% month-to-date vs a 2.4% rise in the Stoxx 600 Health Care index; is up 17% YTD vs a 12% fall in the SXDP index
• Of 14 analyst ratings, 6 are buy, 6 hold, 2 sell, with an average PT of EU35, implying ~5% upside

(Bloomberg) -- Contrary to popular belief, Japanese investors’ demand for dollar funds falls rather than rises in December as they front-load borrowings before the markets thin out for year-end holidays, a seasonality chart suggests.

• USD/JPY 3-mo. basis swaps rose each December since 2012, according to Bloomberg data, indicating a cheaper cost of dollar funding for Japanese investors
  • Swaps fell in June and September every year during this period
• Click here for seasonality chart and here for historical chart
• The contracts currently trade at -75.5bps, up from a record low of -94bps on Nov. 29
• Japanese investors demand for dollar funding typically increases at the end of every quarter, owing to factors such as payments, investments in foreign assets or rollover of currency hedges, says Shuichi Ohsaki, chief rates strategist in Tokyo at Bank of America Merrill Lynch
  • Japanese investors appear to be circumventing the thin year-end holiday period by obtaining dollar funding before foreign banks wind down for the December holidays
  • This will drive down USD/JPY 3-mo. basis swaps, leading to a subsequent rebound in December when investors’ demand eases

Economic Release Details: {CNLNSFIN Index ECOD} --JEFF KEARNS

Economic Release Details: {CNLNNEW Index ECOD} --JEFF KEARNS

Economic Release Details: {CNLNNEW Index ECOD}

(Bloomberg) -- U.K. to sell I/L 0.125% 11/2036 for GBP800m at 11:30am CET. Analysts optimistic on the sale given expectation of hedging demand, modest size on offer.

• SocGen (Marc-Henri Thoumin)
  • 20y demand is more likely to be driven by long-term hedging/liability driven investment than by the inflation outlook
  • Real yields are well off recent lows and with this being the last linker auction of the calendar year, expect decent demand from domestic hedging

• Barclays (Henry Skeoch)
  • The issue is not particularly cheap on the curve, which may prompt some concession; size equivalent to GBP1.1b in cash size, a fairly modest GBP2.2mn/bp of risk
  • Expect the issue to continue to be frequently tapped until built up to benchmark size, which should justify some new issue discount in its valuation
  • Choice of the bond for the auction suggests that there should be demand for it, expect the auction to be well absorbed

• Santander (Adam Dent)
  • Bond to be tapped regularly for the foreseeable future; hold a bullish view on gilts in coming weeks, particularly nominals, but also linkers
  • Inflation breakevens are “very high”, do not see fundamentals as justifying these levels
  • 20y sector appears slightly cheap on both nominal and real yield curves, this bond in particular; recommend buying auction bond vs IL26s and IL44s at 7.6bps, targeting 3.5bps

(Bloomberg) -- Turkish equities have seen meaningful divergence in stock-level performance over the last 10 years, implying opportunities for outperformance, yet moves in yield are a “downside risk,” Goldman Sachs analysts write in e-mailed report.

• Key drivers of divergence among stocks in 2017: cost and debt inflation on FX volatility, credit slowdown on higher rates, slowdown in consumption, sector-specific tailwinds from fiscal support, gradual tourism recovery
• Recommends owning BIM, selling Arcelik, Dogus Oto, Anadolu Efes and Pegasus Airlines
• Raises BIM to buy vs neutral; adds it to “Focus List”
• Upgrades Erdemir to buy vs neutral
• Downgrades Coca-Cola Icecek and Trakya Cam to neutral vs buy
• Removes Emlak Konut from Focus List, maintains “buy” recommendation

Economic Release Details: {INFINFY Index ECOD} --PRADEEP KURUP

(Bloomberg) -- Inditex sales Nov. 1-Dec. 12 at constant FX rise 16%, co. says in regulatory filing Wednesday.

• Inditex gross margin 57.9%; est. 59.8%
• Inditex 9h sales EU16.4b; est. EU16.4b
• Inditex operating profit 9m EU2.82b; EU2.8b

(Bloomberg) -- Here’s a roundup of Indian co. debt-rating changes.

• To get this story sent to your inbox real-time, run NI INRATINGS , click on Display & Edit, then Set Alert Delivery

DOWNGRADES

• Amco Saft
  • Long-term bank facilities cut to BB+ from BBB- at Crisil
  • Cites stretch in working capital cycle

UPGRADES

• Green Infra Wind Farm
  • Term loan raised to A- from BBB+ at ICRA
  • Cites satisfactory performance of the wind asset

• Jayalakshmi Sea Foods
  • LT bank facilities cut to BBB from BBB- at Care
  • Cites improvement in operating efficiency