Halister News

(Bloomberg) -- U.K. Sept. retail sales ex-auto fuel m/m est. 0.2% vs previous -0.3%.

• U.K. Sept. retail sales ex-auto fuel y/y est. 4.4% vs previous 5.9%
• U.K. Sept. retail sales incl-auto fuel m/m est. 0.3% vs previous -0.2%
• U.K. Sept. retail sales incl-auto fuel y/y est. 4.7% vs previous 6.2%

(Bloomberg) -- Spain to sell 0.25% 01/2019, 5.9% 07/2026, 3.45% 07/2066 for EU3-EU4b at 10:30am CET.

• Analysts expect 50y sale to go well given strength of demand in similar BTP issue recently; 10y seen as attractive in RV

• ING (Ben Schroeder)
  • First reopening of ultra-long bond since its launch; recent 50y BTP shows demand in the sector remains strong
  • Valuation-wise, the 30s50s curve has flattened ~6bps since mid-August, with concession ahead of today’s tap leading to a re-steepening of some 2bps
  • Spain also on the verge of finally overcoming a political deadlock

• BBVA (Jaime Costero)
  • 3y looks cheap vs fitted curve, issue attractive in RV vs 10/2017 and 01/2020
  • 10y is an old 15y benchmark, has traded in line with peers; offers some value when looking on z-spread vs 02/2026
  • Strong appetite for 50y BTP; recent flattening of 30s50s suggests hunt for yield continues, some risks in owning the sector ahead of ECB
    • Like buying 50y SPGBs vs Italy as spread looks wide relative to 30y

• Mizuho (Antoine Bouvet)
  • Rise in 3y Spanish yields since mid-October has been relatively modest, limited concession seen ahead of the tap
  • Expect more RV interest in 10y issue given it’s the cheapest in the sector on the fitted curve
    • Suspect there’s a short base among dealers as the bond trades special on repo at ~10bps compared with surrounding issues
  • 50y tap should be well-supported as 30s50s Spain has been flattening this month despite the headwind of 50y BTP syndication, which indicates good investor demand

(Bloomberg) -- Market focus today will be on the ECB meeting and press conference. No policy change is expected, but rhetoric will be closely monitored for any hint QE could be extended beyond March, Bloomberg strategist Simon Ballard writes.

• Any dovish ECB bias would be a fillip for EUR corp bond market and fuel a renewed hunt for yield
• Last night’s final presidential debate yet again failed to see a knock-out blow landed on either candidate
  • Polls suggest Hillary Clinton ‘won’ the debate, although risk market sentiment will likely remain susceptible to headline risk in run-up to election
• Asia credit markets, U.S./EUR equity futures and Mexican peso stronger overnight in reaction to Clinton/Trump debate; suggests firm base for EUR corp bond space Thursday

• Risk Appetite Model grinding tighter as sentiment stabilizes
• Bloomberg Barclays Eur-Agg Corporate index closed yday at 111bps (-1bp); Bloomberg Barclays Eur HY index closed at 381bps (-5bps)
• CDX IG closed -1.6bps at 73.55; iTraxx Asia Ex Japan IG is currently -1.3bps at 116.33 and iTraxx Australia quoted -0.8bps at 103.50

NEWS

• Corporate News
• Nestle Cuts Sales Forecast as Emerging Market Growth Slows
• Husqvarna 3Q Operating Profit, Sales Beat Estimates
• Publicis CEO Sees 4Q Headwind, Growth to Be Higher Next Year
• Pernod Ricard Quarterly Sales Beat Estimates on Americas Growth
• Philips Lighting on Track for Y/y Operational Profitability
• Sulzer 9-Month Order Intake CHF2.1b; Confirms FY 2016 Guidance
• Unipetrol 3Q Net Falls to CZK722m From CZK1.58b Year Earlier
• Turk Telekom Net Income 8.68m Liras in 3Q, Misses Estimates
• Halliburton Ready to Sacrifice Market Share to Boost Profit

• Financial News
• SEB Profit Rose 22% in Third Quarter, Beating Analyst Estimates
• LSE 3Q Total Income Rises 19%; Revenue Increases 15%
• Bankinter 3Q Net EU114m, Beats EU105m Estimate
• Rathbones 3Q Net Operating Income Rises 18.5% Y/y; FUM GBP33.2b
• Wells Fargo Probed for Identity Theft Over Fake Accounts
• Mitsubishi UFJ Said to Weigh Adding Bank Offices in Africa Push
• Barclays CEO Staley Upbeat on Turnaround Program Before Earnings

• Rating News
• Fitch Affirms Fonterra at ‘A’; Outlook Stable
• S&PGR Rates Mondelez Intl Hldgs’ Proposed Unsecured Debt ‘BBB’
• S&PGR Affirms Perth Airport Pty Ltd. ‘BBB’ Rating
• S&PGRBulletin: Crown Rtgs Unaffected By Potential Asset Sale
• Fitch Affirms Sumitomo Life at ‘A’; Outlook Negative

• Other News
• Draghi Seen Keeping Up Suspense on Future of ECB Stimulus Plan
• Credit Surge To Reduce Stability Of China’s Banks: S&PGR
• UniCredit May Need to Generate EU5b-EU11b in Capital, Citi Says
• Trump Refuses to Say He’ll Accept Election Results If He Loses

ANALYST VIEWS

• Heading towards today’s ECB meeting, markets should feel some support at the open with the recent grind tighter in euro credit spreads likely to continue – and if only on muted activity given today’s main event: Commerzbank
• Relative stability suggests credit markets have been unfazed by headline risk, volatility in stocks, heady intraday moves in FX and the sometimes uncertain direction of govt bond markets. That has also been the case of late in the high yield market which is usually much more correlated with equity market volatility: creditmarketdaily.com

NEW ISSUES

• ACEA EU500m 10Y MS +77
• Berlin Hyp EU175m 0.375% 5/2024 Cov Tap MS -14
• State of Brandenburg EU200m 2Y FRN 6mE -24
• Citigroup EU1.75b 7Y, EU1b 12Y Bonds
• Enagas Financiaciones EU500m 10Y MS +42
• TUI EU300m 5Y 2.25%
• UPS EU500m 12Y MS +45
• 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) -- Expect the EGB index duration to extend by 0.13y at the end of October, this would be the largest month-end extension in 6-months, and the biggest October change in 5-years, writes Citi strategists including Aman Bansal in a client note.

• In terms of weighted duration, the Italian index is projected to extend the most, followed distantly by France
• All three major indexes changes will extend by more than their 5y averages, with both gilt and Treasury indexes projected to extend by 0.10y

INFLATION-LINKED BONDS

• European Inflation-linked Securities Index is projected to extend by 0.23y at the end of October, similar to the extension seen at end of September, potentially the third highest in a year
  • Changes should be supportive for 15y+ sector; In terms of weighted duration changes, month-end changes should be most supportive for France which sees its largest extension in 5-years

• NOTE: Weighted duration of a country is calculated as (market value of country) x (effective duration) / (market value of EGBI)
  • Very significant for EGBI portfolio managers as they attempt to keep it unchanged through month-end re- balancing: Citi

(Bloomberg) -- Move to restrict cash payments for precious metals to bank’s regular customers linked to compliance with international political accords on sanctions, Wirtschaftswoche says.

• German money laundering rules don’t bar cash payments for metals for non-regular customers: WiWo
• Finance Ministry in Feb urged upper limit for cash payments