Halister News

(Bloomberg) -- Last week saw the largest net buying of core EGBs in a year, led by German and French bonds, Citigroup strategist Aman Bansal writes in client note.

• On the core curve, net buying was led by the 10Y and 30Y sectors where non-core saw net selling in the 10Y sector
• Euro linker demand was flat last week with net buying of France offset by net selling of Germany
• Gilts saw small net selling, fourth week of net selling in the 30Y sector offset net buying of 30Y+
• Small net buying of index-linked gilts last week
  • In contrast to conventionals, linker gilts saw net buying in the 30Y sector, which offset net selling in 30Y+

(Bloomberg) -- A quiet but reasonably firm start to the week, month and quarter thus far. Asian credit markets edged tighter overnight in the wake of yesterday’s generally robust PMI data, which should help to underpin EUR market sentiment at the open later, Bloomberg strategist Simon Ballard writes.

• Deutsche Bank still the elephant in the room, fueling systemic risk fears; keen focus on comments, rhetoric from officials
  • But U.S. politics may also increasingly drive market sentiment over coming weeks as we enter final furlong of presidential campaign
  • Geopolitics also an ongoing risk to financial market stability as U.S. halts Syria talks with Russia and as Brexit timing intensifies uncertainty
• Risk Appetite Model shows signs of stability again after recent weakness
• Bloomberg Barclays Eur-Agg Corporate index closed yday at 115bps (unchanged); Bloomberg Barclays Eur HY index closed at 415bps (-2bps)
• CDX IG closed -0.7bps at 75.13 in overnight session; iTraxx Asia Ex Japan IG currently -1.4bps at 116.69 and iTraxx Australia quoted +0.3bps at 103.25

NEWS

• Corporate News
• Bang & Olufsen 1Q Revenue in Line With Ests.; Keeps FY Outlook
• Monsanto Earnings Recovery May Be a Better Bet Than Bayer Deal
• AstraZeneca Brilinta Didn’t Demonstrate Benefit Vs Clopidogrel
• St Ives Says Trading Across Strategic Marketing Has Stabilised
• Ssangyong Motor’s September Sales Rise 5.7% to 12,144
• Kewpie Slides Most in Two Months as Profit Growth Slows in 3Q
• Bonduelle Op. Profit to Stagnate Amid Tough Harvest Conditions
• Ericsson May Cut Up to 4,000 Swedish Jobs This Week, Report Says
• EDF to Reclaim EU1b From Clients for 2014-15, Le Figaro Says
• LVMH to Buy 80% of German Suitcase Maker Rimowa for $716 Million

• Financial News
• First Bank Boss to Face Australia Grilling Defends Profits
• Commercial Bank of Africa 1H Pretax up 20% as Market Share Grows
• Italian Banks to Remain Unloved in Europe Sector: Credit Suisse
• BPM May Become Takeover Target Without Merger, CEO to Sole
• Russia’s Largest Lender Sberbank Starts Apple Pay Transactions

• Credit Rating News
• Moody’s assigns Ba3 rating to Belden’s proposed EUR note issuance
• Fitch Affirms L-STaRS One Funding Limited; Outlook Stable

• Other News
• May Said to Dash City Hopes in Brexit Shock for Banking Sector
• Doha Bank CEO Says Saudi Arabia ‘Missed the Boat’ on Borrowing

ANALYST VIEWS

• Lots to think about on the opening session of the final quarter.. (albeit) little talk of an impending systemic financial crisis - but we know that can emerge anytime - on a spurious report or a misplaced comment (or otherwise) from a figure in authority around Deutsche Bank: creditmarketdaily.com
• We maintain our overall careful stance with a tactical bias towards buying (CSPP) candidates in the cash space, and would look to buy protection in the high 60s in Main and low 300s in X-over: Commerzbank

NEW ISSUES

• Gatwick Funding GBP300m 10/2046 UKT +120
• 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 USD Libor rate to rise and FRA/OIS spread to widen a bit further into the full implementation of new money-market reforms on Oct. 14; these markets should then stabilize and represent a more realistic price for USD funding, ANZ strategists Martin Whetton and Katie Hill write in note.

• Further reduction in prime funds holdings in the coming days should push USD Libor higher and FRA/OIS wider
• After the full implementation of reforms, markets should stabilize and reflect more cyclical news around the banking sector, in addition to reflecting market-based expectations of a Dec. Fed rate rise
• Other key variables to watch include use of USD swap lines at various central banks, primarily the BOJ and ECB
• Domestic USD basis, which has steepened, probably reflects the peak for 1-year basis
• 3-month EUR/USD and USD/JPY cross-currency basis are also important to gauge the demand from non-U.S. counterparties hedging loans, assets and borrowings
• Widening bank credit spreads are an important measure of the market’s perception of asset quality; the CDS market has become an illiquid and poorly-traded financial instrument