EU CREDIT DAILY: Rates Pressure; Remy Beats, Thyssenkrupp Stable
(Bloomberg) -- Happy Thanksgiving! Rates market selloff, putting renewed pressure on corporate bond valuations, will likely feature in upcoming discussions about 2017 asset allocations. Current rising yields likely to limit near-term credit spread tightening potential; sideways movement may be the best investors can now hope for, Bloomberg strategist Simon Ballard writes.
- Rates volatility has persisted in Asia overnight with synthetic credit indexes weaker again; suggests net wider bias persisting in EUR credit market
- Rates weakness has erased 199bps off IG credit ytd total return since Oct 1; from 6.00% (Oct 1) to 4.01% as of close yesterday
- Credit market volume expected to be modest Thursday with U.S. market closed; macro focus on German Nov Ifo business confidence, German and Spanish final 3Q GDP
- Bloomberg Barclays Eur-Agg Corporate index closed Wednesday at 124bps (flat); Bloomberg Barclays Eur HY index closed at 423bps (-2bps)
- CDX IG closed Wednesday -0.5bps at 74.22; iTraxx Asia Ex Japan IG is currently +0.6bps at 126.91 and iTraxx Australia quoted +1.0bps at 110.08
NEWS
- Corporate News
- Severn Trent 1H Turnover, Profit Up; Sees Lower Interest Charge
- Thyssenkrupp to Keep Dividend Stable as Profit Matches Estimates
- Melisron 3Q Profit Rises 16% as Rental Income Increases
- CVS Group Says Underlying Profitability Ahead of Expectations
- Pets at Home Says FY Profit Outlook In Line With Market Ests.
- Euromoney FY Rev. Beats Ests.; Sees Return to Growth in 2018
- Countrywide Sees FY Ebitda Around Lower End of Market Estimates
- Marston’s FY Underlying Pretax In Line, Encouraging Start to FY
- Mothercare 1H Adj. Pretax Falls, 2H to Date In Line With Plans
- Pierre & Vacances FY Net Loss Narrows, Helped by Tourism Unit
- Remy Cointreau 1H Current Operating Profit Beats Estimates
- Gatwick Airport 6-MO Rev Up 8.1% to GBP445.2m
- Financial News
- Maybank Slashes Loan Growth, Return Targets After Earnings Drop
- PayPoint 1H Revenue Drops 1.1%, Says Trading In Line
- Commercial Bank of Africa 9-Month Net KES3.91b vs KES2.56b
- Sabadell’s TSB in Talks to Acquire U.K. Mortgages: Expansion
- Rating News
- Moody’s Raises Transpower NZ Ratings Outlook to Positive
- S&PGR Affirms Rtgs On Six Thai Banks; Otlks Stable
- Transurban Rtgs Unaffected By Logan Project: S&PGR
- Fitch: Australia Regional Banks’ Risk Appetite to Sway Ratings
- Fitch: China Power Companies Face Further Margin Erosion in 2017
- Other News
- Cautious Fed Sees Labor Market Strong Enough for December Hike
- S&P Says Negative Momentum in Credit Quality Likely to Continue
- Deutsche Asset Management Positive on Asian Credit
ANALYST VIEWS
- It is the rising yields environment which is preoccupying corporate bond investors. We’re not piling in on the back of the better valuations, despite the demand for primary risk: creditmarketdaily.com
NEW ISSUES
- 4finance EU50m 11.25% 5/2021 Tap at 100
- ABN Amro Bank GBP300m 2Y FRN 3mL +50
- Adecco EU500m 8Y MS +65
- ASML EU750m 5/2027 MS +95
- CAFFIL EU500m 15Y Covered MS +17
- China Eximbank EU1.15b 3Y MS +35, EU850m 5Y MS +60
- Cramo EU150m 2/2022 MS +225
- UBS Group Funding (Jersey) EU1.25b 8NC7 MS +108
- 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.
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
Tickers TKA GR (thyssenkrupp AG)
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