Halister News

(Bloomberg) -- While the immediate market impact of the Italian referendum on Dec. 4 may not seem dramatic, hedging for the risk is also relatively easy given little European referendum risk premium seen in asset classes, Morgan Stanley economists including Daniele Antonucci write in client note.

• Bank recommends buying 6-month EUR/USD puts, given dollar strength following the U.S. election outcome and room for idiosyncratic euro weakness
• Despite the upcoming referendum, EUR options volatility is a major outlier, remaining well below average when most DM and EM FX vols are trading above average
• A reversal of the recent correlation pattern on Italian stress, would create an attractive upside in EUR puts
• In other asset classes, Morgan Stanley likes to buy Eurostoxx puts contingent on a weaker euro, buy protection on iTraxx main vs CDX IG and short BTPs vs European credit
• NOTE: BTPs sold off last week on concern a defeat for PM Renzi in the Dec. 4 vote could threaten political stability

(Bloomberg) -- Yield on 10-yr govt bond +14bps to 10.99%, highest since Jan. on closing basis.

• Treasury due to sell 2-year and 9-year fixed coupon debt in auctions Monday, 5-yr floating and fixed coupon bonds Tuesday
• “The timing is unfortunate, given the deterioration in global liquidity conditions,” writes Erkin Isik, a strategist at TEB in Istanbul
  • “Bids will likely remain weak even after the recent sell-off in bonds, so we don’t recommend buying bonds yet”
• TRY -0.9% to 3.2791/USD as of 11:44am in Istanbul, set to close at record

(Bloomberg) -- Credit markets are poised to open this week with more spread consolidation as a global bond rout continues, Bloomberg strategist Simon Ballard writes.

• Financial markets still grappling with market implications of a Trump presidency; first team appointments announced
  • Rates curve steepening triggers defensive bias in weaker/peripheral Euro area sovereigns, protection buying in synthetics even as cash bond spreads remain anchored
  • Italian credit risk may come under increased scrutiny ahead of December 4 referendum
• Firm China Oct industrial production data underpins global macro outlook; a near-term support for risk appetite

• Bloomberg Barclays Eur-Agg Corporate index closed Friday at 113bps (+1bps); Bloomberg Barclays Eur HY index closed at 394bps (+7bps)
• CDX IG closed Friday +1.2bps at 75.97; iTraxx Asia Ex Japan IG is currently +8.7bps at 134.29 and iTraxx Australia quoted +2.9bps at 114.19

NEWS

• Corporate News
• Samsung Electronics Agrees to Buy Harman for $8 Billion in Cash
• RWE’s Net Loss Worse Than Expected as Power Prices Decline
• Lonmin FY Sales of 735,747 Platinum Oz Exceeded 700k Oz Forecast
• William Hill Continues to Expect FY Operating Profit at Top End

• Financial News
• Mizuho Profit Beats Estimates as Tax Gain Offsets Loan Slump
• Nomura Hires StanChart’s Pearson as Asia Ex-Japan FIG Head
• Handlowy 3Q Net 144.9m Zloty; Analyst Est. 145.9m Zloty

• Rating News
• Fitch: Most Asian Telcos to Come Under Pressure in 2017
• Global Sovereign Outlook Is Negative, Moody’s Says
• S&PGR Revises Brambles Liquidity Score To Strong; Rtgs Affrmd
• Fitch Affirms New Zealand’s LGFA at ‘AA+’; Outlook Stable
• S&PGR Revises Adani Abbot Point Terminal Pty Ltd Otlk To Neg; ‘BBB-’ Rtg Affirmed

• Other News
• U.S. 30-Year Yield Hits 3% as Pimco Says Rates May Be Bottoming
• Priebus Named Trump’s Chief of Staff, Bannon as Strategist

ANALYST VIEWS

• Although the widening in credit... was moderate so far, and the market by and large remains in good shape, the coming sessions will be crucial: Commerzbank
• It was going just swell for the income markets - until President-elect Trump came along. Love or loathe him, the expected unleashing of the fiscal dogs come 2017 has just about ruined fixed income’s 2016 performance: creditmarketdaily.com

NEW ISSUES

• No deals priced on Friday
• 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) -- Siemens to acquire design automation, industrial software provider Mentor Graphics for $37.25 per share.

• Represents enterprise value of $4.5b
• Offer price represents a 21% premium to Mentor’s closing price on Nov. 11
• Mentor’s Board of Directors approved merger deal, recommends approval, adoption of merger agreement by holders of shares of Mentor common stock
• Mentor shareholder Elliott Management has committed to support transaction

Statement

--ANGELA CULLEN

(Bloomberg) -- Samsung Electronics will acquire Harman International for $112 per share in cash, according to e-mailed statement from Samsung.

• Uopn closing, Harman will operate as a standalone Samsung subsidiary
• The purchase price represents a premium of 28% based on Harman’s closing stock price on Nov. 11
• The transaction, which is subject to approval by Harman shareholders, regulatory approvals and other customary closing conditions, is expected to close in mid-2017

(Bloomberg) -- Philippine President Rodrigo Duterte rebukes central bank and Anti-Money Laundering Council for “being hard to deal with” and warns them against confrontation which will happen if they don’t cooperate.

• Duterte gave remarks in speech at 80th anniversary of National Bureau of Investigation, recalling that when he was campaigning for presidential election, a senator accused him of hiding funds, which he had denied
• Duterte says “there are billions” in funds being laundered which central bank and anti-laundering agency must reveal; he didn’t specify personalities or institutions
• “You better go to the secretary of justice or I will go to you,” Duterte says; “Do not make it hard for us. Otherwise, I’ll make it hard for you”
• Bangko Sentral ng Pilipinas has no comment at this time, according to its corporate affairs department
• NOTE: Duterte Says BSP, AMLC ‘In Hot Water’ If He Becomes President Link

--With assistance from Siegfrid Alegado.