Halister News

(Bloomberg) -- Elevated levels of political risk and uncertainty next year could hurt global sovereigns, Fitch Ratings says.

• Trend away from conventional politics “reduces the predictability of policy direction in advanced countries in 2017”
• Looser fiscal policy and greater trade protectionism also pose risk to creditworthiness among both advanced and EM economies
• Overall outlook for sovereign ratings in 2017 remains stable but risks “clearly tilted to the downside”
• Euroskepticism and populism could “affect European cohesion” in coming months, with any further significant political shocks potentially “hugely damaging for the European project”

NOTE: Italy Vote Risk May Rattle South-East Europe Bonds

--JANA RANDOW

(Bloomberg) -- German government lays out agenda for its Group of 20 presidency in position paper.

• Germany to seek further steps against terror financing, money laundering
• To address potential disruptive market effects of large, volatile movements of capital and risks of “shadow banks”
• G-20 needs to react to slowing of global trade growth, take stand against protectionism
• Underscores commitment to G-20 carrying out provisions of Paris climate accord
• Document obtained by Bloomberg
• NOTE: German G-20 presidency starts Thursday, includes summit of leaders in Hamburg on July 7-8

(Bloomberg) -- Net demand for core EGBs remained positive for a ninth week, but the magnitude of demand has fallen sharply over recent weeks, Citigroup strategist Aman Bansal writes in client note.

• Net buying in EGBS last week was led by France while Germany led net selling
• Euro linkers saw net selling last week, led by Bundei
  • In contrast, French linkers saw net buying after Francois Fillon led in the first round of Conservative primaries
• Linker gilts continued to see net selling for a third week, concentrated in the 30y+ sector

--VERONICA EK

(Bloomberg) -- Month-end book squaring may generate some credit market flow, but broad activity levels likely to remain muted ahead of Italian referendum on Dec. 4. Subsequent ECB and FOMC meetings may also damp near-term investor appetite, Bloomberg strategist Simon Ballard writes.

• Derivative indexes remain among most liquid and efficient means to reflect gyrations in investor sentiment; iTraxx senior, subordinated financial indexes may rise further near-term as investors buy protection to hedge against referendum uncertainty
  • Italian bank spreads being pressured wider by investor caution; may see further widening if ‘No’ vote on Sunday, or could be seen as attractive entry point if ’Yes’ vote prevails
• Asia credit markets mixed overnight with net cautious tone underpinning defensive IG corporate risk; suggests firm base to European cash credit risk at the open

• Bloomberg Barclays Eur-Agg Corporate index closed Monday at 126bps (+1bp); Bloomberg Barclays Eur HY index closed at 428bps (+4bps)
• CDX IG closed Monday at 73.57 (+0.4bps); iTraxx Asia Ex Japan IG is currently -1.5bps at 126.83 and iTraxx Australia quoted -0.7bps at 109.56

NEWS

• Corporate News
• Apple Gets Win Against Australia Banks Over Mobile Payments
• UnitedHealth’s 2017 Profit Forecast Tops Analysts’ Estimates
• Countryside Properties Says Current Trading ‘Remains Robust’
• Shaftesbury FY Net Asset Value Rises, Total Dividend Up 6.9%
• Samsung Plan to Boost Value Falls Short of Elliott’s Goals
• Merlin Sees Good Profit Growth in 2016, in Line With Views
• Nissan Seeks Aftersales Revenue Boost From Connected Services

• Financial News
• DBS, Bank of Singapore Ready for Acquisitions in Wealth Mission
• Banks in Denmark Face Deregulation Era With New Minister at Helm
• Bank Indonesia Sees 2016 Loan Growth Exceeding 7%

• Rating News
• S&PGR Revises Otlks On SMFG And Banks To Positive, Afms Rtgs
• S&PGR Affirms, Withdraws Medical Securities Ltd. ‘BBB+’ Rtgs
• Bluescope Steel Credit Rating Raised One Notch by Moody’s to Ba1
• Imperial Pacific’s Junk Rating May Be Lowered by Moody’s

• Other News
• Ex-Goldman Partner Teague Taps Big Names for Boutique Adviser
• OPEC Said to Remain Split as Russia Says It Won’t Attend Meeting
• Korea’s Scandal-Hit President Says She’s Willing to Resign

ANALYST VIEWS

• ECB CSPP total purchases are now up at EU46.23b - or, put another way, a good two months worth of gross IG issuance... had helped spreads tighten by a good amount (initially), and now are probably preventing them from widening more aggressively: creditmarketdaily.com

NEW ISSUES

• Continental EU600m 2/2020 MS +27
• Gas Networks Ireland EU500m 10Y, EU125m 20Y
• HeidelbergCement EU1b 2/2025 MS +127
• Severn Trent GBP400m 15Y UKT +105
• European IG credit pipeline here and HY credit pipeline here

• 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) -- Yields in short to medium term part of JGB curve are unlikely to see much downward pressure due to absence of speculation on further interest rate cut by the BOJ, Keiko Onogi, fixed-income strategist at Daiwa Securities, says.

• However, rise in the yields of those sectors has at least been halted by BOJ’s fixed-rate bond-purchase operation
• BOJ will probably maintain the amount for December bond purchase operation
  • NOTE: Bond purchase plan for December is due on Wednesday
• The central bank is expected to conduct fixed-rate operation when it sees yields rising excessively while it will probably reduce the amount of bond purchases when yield decline is deemed excessive: Daiwa
• Yield on 10-year govt bond rises 0.5bps to 0.015%