Halister News

(Bloomberg) -- Risk assets quickly recovered any early weakness following the Italian referendum, and the primary market is likely to reopen with corporates in the mix, writes Bloomberg strategist Simon Ballard.

• While Italian risk looks set to remain under some pressure, the broader tightening trend has resumed
• It’s likely the ECB backstop is reassuring investors and limiting downside risk to corporate bond prices; the central bank bought another ~EU1.92 of bonds last week
• However, continued weakness in government bonds and a steady rise in yields is quietly eroding the total return profiles of risk assets
• A further sell off in rates could damp investors’ risk appetite; fuel demand for more defensive assets such as government bonds going into the traditional January spike in corporate new issues
• In terms of primary activity today, there are possible transactions to come from AusNet Services and Zimmer Biomet

• European IG credit pipeline here, leveraged finance pipeline here

• Bloomberg Barclays Eur-Agg Corporate index closed Monday at 126bps (-1bp); Bloomberg Barclays Eur HY index closed at 414bps (-4bps)
• CDX IG closed Monday at 72.17 (-0.7bp); iTraxx Asia Ex Japan IG is currently -0.6bps at 124.38 and iTraxx Australia quoted -0.7bps at 108.21

NEWS

• Corporate News
• Wolseley 1Q LFL Revenue Growth 1.8%; Sees FY Profit In Line
• Nissan Note Outsells Prius in Japan for No. 1 Spot in November
• Ashtead 2Q Adj EPS 31.8p; Sees FY Results Ahead of Its Forecasts
• Drax FY Ebitda Seen at Bottom of Range of Forecasts; Buys Opus
• Telecom Plus Sells Stake in Opus Energy Group for GBP71m
• OSG Corp Reports 9-Month Group Earnings Results
• Toyota Shrinking Hybrid Systems to Supply Other Carmakers

• Financial News
• ABN Amro to Sell $20 Billion of Private Banking Assets to LGT
• Nordea to Add to $9 Billion Synthetic Deal Using Similar Terms
• Paschi Completes Debt Swap as Recapitalization Plan Teeters
• Paschi Executives to Meet ECB on Capital Plan Today: Il Sole

• Rating News
• Moody’s Confirms Sanral Credit Ratings, Assigns Negative Outlook
• QTS Realty Raised to B1 from B2 by Moody’s on Sound Performance
• Starwood Property Upgraded to Ba2 by Moody’s; Outlook Stable
• S&PGR Affirms Christchurch Council ’A+/A-1’ Rtgs; Otlk Stable
• S&PGR Upgrades MyState Bank Ltd. To ’BBB+’; Outlook Negative

• Other News
• HSBC Lashed Out When VP Flagged Sex Harassment, Jury Told
• ECB Haunted by Ghost of Christmas Past as Stimulus Choice Nears
• SoftBank’s Son Said to Plan Meeting With Trump in New York

ANALYST VIEWS

• “The signs are ominous that we are unlikely going to see much (new issue volume) now, save for the odd borrower in IG, while we can expect a higher level from HY if market volatility stays low, given the number of deals in the pipeline. We’re going to tick over into the end of next week. Then close”: creditmarketdaily.com

• NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- AUD/USD may retest 0.7311 hit on Nov. 21 if 3Q GDP misses est., Bloomberg strategist Michael Wilson writes.

• 3Q GDP probably shrunk 0.1% q/q vs 0.5% prior, according to median est. of 24 economists surveyed by Bloomberg; range of ests. -0.5% to +0.4%; data due 11:30am local tomorrow
  • Year-on-year seen +2.2% vs +3.3% previously
• 3Q net exports cut 0.2 percentage point from GDP
• That led to downward revision in forecasts to -0.1% q/q, survey shows
• More hawkish than expected FOMC statement on Dec. 14 may further pressure A$; Credit Suisse sees market mispricing risk of more Fed hikes in 2017-2018
• WIRP pricing gives just 6% chance of RBA cut in February, allowing plenty of scope for repricing
• Recent rate increases by big local banks adds to need for lower cash rate to keep consumer and business lending rates relatively unchanged, Nomura notes
• AUD/USD Nov. 21 low of 0.7311 was weakest since June 24; now at 0.7448
• NOTE: Michael Wilson is an FX strategist who writes for First Word. The observations he makes are his own.

(Bloomberg) -- Japan’s sovereign curve bear-steepens as outcome of enhanced liquidity auction indicates weak demand amid global yield rally, spurring concern over 30-year sale on Dec. 8, says Takafumi Yamawaki, chief rates strategist at JPMorgan.

• NOTE: Auction of bonds with remaining maturities of 15.5 years to 39.0 years drew bid-to-cover ratio of 1.83, down from 2.69 at Oct. 18 sale of similar tenors
• If 30-year JGB sale has weak result and lifts 10-year yield toward 0.070%, market participants could become aware of possible fixed-rate purchase operation by BOJ: Yamawaki
• NOTE: BOJ conducted first fixed-rate bond-buying operation, with maturities of 1 to 3 years and 3 to 5 years on Nov. 17
• JGB 10-year yield rises 1bp to 0.045% after earlier touching 0.050%, highest since Feb. 18; 20-year yield up 2.5 bps at 0.495%, 30-year yield up 3.5bps at 0.620% and 40-year yield up 4.5bps at 0.730%

(Bloomberg) -- Reserve Bank of Australia is scheduled to deliver its decision on benchmark cash rate target at 2.30pm local time.

• RBA cash rate target est. 1.50% vs prev. 1.5%
• RBA PREVIEW: Policy seen on hold; BMO to sell AUD/USD above 0.75

(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

UPGRADES

• Chettinad Cement
  • Long-term bank facilities raised to AA+ from AA at Care
  • Cites significant improvement in capital structure

• Man Structurals
  • LT bank facilities raised to BBB from BBB- at Care
  • Cites healthy order book position

• Merino Industries
  • LT bank facilities raised to AA- from A+ at Care
  • Cites improvement in profitability, capital structure, debt coverage indicators