Halister News

(Bloomberg) -- While ECB’s corporate-debt purchases dipped back below EU2b last week, it has accumulated EU37.82b of bonds since program started at an average EU1.8b a week. Continuing QE should provide a solid base for spread performance, even if a further selloff in rates market could erode near-term credit returns, Bloomberg strategist Simon Ballard writes.

• European credit market sentiment should be buoyed Tuesday by stronger-than-consensus China PMI data overnight; Asia equities, synthetic credit spreads set stronger tone
  • U.K. manufacturing PMI (October) due later; positive impact of weak pound on exports may be offset by poor domestic demand
• U.S. election campaign now into last week; continued uncertainty over coming days may keep risk investors sidelined, damp U.S. credit-market performance
• Risk Appetite Model Volatility Evaporates Into Month-End
• Bloomberg Barclays Eur-Agg Corporate index closed Monday at 109bps (flat); Bloomberg Barclays Eur HY index closed at 375bps (+3bp)
• CDX IG closed Monday +2.0bps at 78.07; iTraxx Asia Ex Japan IG is currently -0.1bps at 116.56 and iTraxx Australia quoted -0.3bps at 103.50

NEWS

• Corporate News
• Shell Profit Rises 17% After BG Purchase, Countering Oil’s Slump
• BP Profit Slides 49% on Weaker Oil Refining, Beats Estimates
• Weir FY Profit to be Slightly Lower Than Market Expectations
• Sony Profit Falls Short of Estimates on Sale of Battery Business
• DSV 3Q Adjusted Net Beats Estimates; Raises FY Profit Outlook

• Financial News
• ANZ Boss Elliott Wields Ax on Asia Units to Boost Returns
• RBS’s Ulster Bank Unit Fined EU3.33m for Irish Regulatory Breach
• Deutsche Bank Making Amends to Win Back SMEs, Bender Tells FAZ

• Rating News
• Moody’s upgrades Hyundai Steel to Baa2; outlook stable
• S&PGR Assigns Envigo Holdings ’B-’ Rating; Outlook Stable

• Other News
• Norway Keeps Wealth Fund Withdrawals at NOK10.6B in September
• China Starts Credit-Default Swap Trading With 300m Yuan
• October Surprise Puts U.S. Vote Back Atop Currency Risk List

ANALYST VIEWS

• Investor cash levels are a little higher than normal because primary market will not be satiating their needs. At worst, spreads aren’t likely to gap wider, and returns will be assured assuming the underlying (government bonds) do not sell off in any major way from these levels: creditmarketdaily.com

NEW ISSUES

• Enterprise Inns GBP250m 5NC2 Notes 6.375% Coupon
• European IG credit pipeline here and HY credit pipeline here
• Issuers exposed to S-T rollover and interest-rate reset risk 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) -- Ulster Bank Ireland DAC fined for anti-money laundering and terrorist financing failures.

• Breaches occurred over a six year period; breaches identified significant failings in Ulster Bank Ireland’s anti-money laundering/countering financing of terrorism framework and procedures
• Breaches linked to outsourcing, risk assessment, due diligence
• Ulster breaches “especially concerning as they point to unacceptable weaknesses in key aspects of its anti-money laundering framework, systems and controls over an extended period of time,” Central Bank says in e-mail statement
• Breaches admitted by Ulster Bank Ireland, central bank says

(Bloomberg) -- Bank of Japan Governor Kuroda is scheduled to hold a press conference at 3.30pm local time following the central bank’s decision earlier today to maintain policy stance.

• EARLIER: BOJ keeps policy unchanged even as it cut forecast for inflation in the coming fiscal year to 1.5% from 1.7%

(Bloomberg) -- AUD surges as RBA says economic conditions in China have steadied and inflation is seen “climbing gradually” over the next two years, even as rates were left unchanged. BOJ also held policy and said risks to both growth and CPI are skewed to downside;

• Investor attention is shifting to BOJ’s November bond-buying plan due today, which may outweigh rates decision
• BBDXY falling for third day, -0.06% to 1,207.48
• 10-year Treasury yield up 2bps to 1.85%
• Oil, copper rising while gold is little changed
• AUD/USD +0.59% to 0.7654 vs 0.7598-0.7659 range
• AUD is bought by macro funds responding to RBA’s China view and noting that house prices are rising in some markets: traders
• NOTE: China factory PMI for October rose to 2-year high, beat forecast
• Some investors also cite RBA’s reference to gradual pickup in inflation, says another trader
• USD/JPY +0.1% to 104.87 vs 104.67-104.97 range
• Pair rose initially before slipping back to near unchanged after BOJ lowered FY2017 core CPI forecast to 1.5% vs 1.7%; sees CPI hitting 2.0% in 2018
• USD/CAD is steady after a 5-day gain, little changed at 1.3415
• UBS raises year-end forecast to 1.36 from 1.25 as cheaper oil is negative for CAD, along with risk of lower inflation readings; story here
• NOTE: Mark Cranfield is an FX strategist who writes for First Word. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- A lot of month-end fiscal numbers are seasonal in nature and interpretations should be made with care, says Vivek Rajpal, Singapore-based rates strategist at Nomura.

• NOTE: April-Sept. budget deficit widened to 84% of fiscal 2017 estimate; that’s the highest level for a first-half deficit in almost two decades, according to Business Standard
• “In October, we observed government buying back bonds, which suggests that government was comfortable with its cash surplus levels,” Rajpal says
• NOTE: India last week bought back 184.6b rupees of bonds vs planned 200b
• Says interbank liquidity tightened in October because govt’s cash surplus had risen
• “I wouldn’t be too worried about the fiscal situation, looking at end-September numbers.”
• Also, from a strategic perspective as well, govt will ensure deficit targets are met for the fiscal year: Nomura
• Yield on 10-year govt bond down 2bps to 6.77%

(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

• Electrosteel Castings
  • Long-term bank facilities cut to BBB+ from A at CARE
  • Cites low debt coverage indicators and tight liquidity position
• Yuken India
  • Long-term rating cut to BBB- from BBB at CARE
  • Cites continuing weakness in profitability due to delay in ramping production at foundry

UPGRADES

• Asian Granito
  • Cash credit and term loan raised to A from A- at ICRA
  • Cites improvement in scale and profit margins in FY16 and FY17
• JK Cement Works (Fujairah)
  • Long-term loan raised to AA-(SO) from A+(SO) at CARE
  • Cites corporate guarantee from parent
• JM Financial Asset Reconstruction Co
  • Long-term rating raised to AA- from A+ at Crisil
  • Cites expectation of strong support from JM Financial