Halister News

(Bloomberg) -- Many investors will likely be hoping that Q4 starts on a more positive tone than Q3 finished, even as credit market total returns remained healthy, Bloomberg strategist Simon Ballard writes.

• Deutsche Bank remains at the center of current market sentiment gyrations; hopes for a reduced settlement figure with U.S. DOJ buoying Asian credit markets overnight
• GBP credit risk may be negatively impacted again this week by Brexit risk
  • U.K. government has announced it plans to invoke Article 50 by end March 2017
• Meanwhile U.S. political uncertainty may also become more elevated in run-up to U.S. election; may weaken foreign investor perception of U.S. risk

• Bloomberg Barclays Eur-Agg Corporate index closed Friday at 115bps (+1bp); Bloomberg Barclays Eur HY index closed at 417bps (+5bps)
• CDX IG closed -2.1bps at 75.17 in overnight session; iTraxx Asia Ex Japan IG currently -0.7bps at 117.35 and iTraxx Australia quoted -2.1bps at 102.92

NEWS

• Corporate News
• Telia Signs EU1.5b Revolving Credit Facility With 13 Banks
• BHP Says Olympic Dam Ops. Remain on Care After Power Outage
• Adastria Soars After FY Net Income Forecast, 1H Profit Boost

• Financial News
• Money Manager Janus to Merge With Henderson to Boost Assets
• Deutsche Bank Said Poised to Advance on 1,000 Planned Job Cuts
• ING Announces 2020 Targets, Sees Job Cuts, IT Investment Program
• NAB finishes wealth shake-up with sale of life insurance
• Numis Says FY Revenue Rose Above GBP100m for First Time
• Bank Austria May Cut 2,500 Jobs in Voluntary Termination
• Macquarie, Goldman value Bravura at up to 20-times profit
• What Should Worry Us About Deutsche Bank: Mohamed A. El- Erian

• Credit Rating News
• BoJ Actions Could Add to Risks Faced by Japanese Banks: Fitch
• Moody’s assigns (P)A3 to Chubu Electric Power’s domestic shelf registration

• Other News
• Pimco Warns of Asia Debt Risk After Record Dollar Bond Sales
• Morgan Stanley Says Sell Bunds as Gap to U.S. Widest Since March
• May Leaves Brexit Questions Unresolved After Setting Trigger

ANALYST VIEWS

• That was a difficult end to the quarter, if ever there was one. The stench of a potential global systemic financial mishap of almighty proportions is in the air. We don’t believe in the worst case scenario, but the drama could yet unfold into a crisis: creditmarketdaily.com

NEW ISSUES

• Sarens Finance EU125m 2/2022 Tap 98.50
• AFDB EU750m 10Y MS -10
• Republic Of Latvia EU650m 10Y MS +19
• Dea Finance EU400m 6NC2.5 Senior Notes 7.50%
• Global University Systems GBP77.3m 8% 7/2020 Tap at 97
• 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) -- Following FT report that U.K. will look at allowing pension funds to suspend inflation-linked rises for retirees, GBP linker market has opened to the idea that defined-benefit regulation may weaken structural demand for inflation, RBS strategists including Giles Gale write in client note.

• 30y breakevens fell sharply following the report, while long-dated real yields rose ~15bps in an hour
• See this theme “as a fade”; U.K. linker market previously had similar fears in the past, each time the government has backed off
• Even if parliamentary committee permits schemes to reduce inflation exposure to avoid falling into Pension Protection Fund, that would only be allowed under strict circumstance

(Bloomberg) -- ING announces 2020 financial targets including Group CET1 ratio above the prevailing fully-loaded requirement, currently 12.5%, with a leverage ratio above 4%.

• Says target for the cost/income ratio is 50%-52%
• Reiterates intention to pay a progressive dividend over time
• Announces investment of EU800m continued digital transformation in order to further improve customer experience, accelerate growth in primary customers and lending.
• Says programs to also lead to ~EU900m annual cost savings by 2021; intended initiatives impact around 7,000 employees, mostly in Belgium and the Netherlands
• Says for the intended workforce reductions, a pre-tax redundancy provision of ~EU1.1b expected to be booked, of which EU1b in 4Q

Link to Statement:Link

--MARTIJN VAN DER STARRE

(Bloomberg) -- The inclusion of the renminbi in the IMF’s Special Drawing Rights basket likely to have a marginal impact on demand for the currency and no immediate effect on China’s sovereign rating, Fitch says in statement.

• A separate IMF decision to include yuan in its Currency Composition of Official Foreign Exchange Reserves (COFER) survey implicitly bestows it with reserve currency status, which could provide support to China’s rating profile over the medium term: Fitch
• NOTE: China’s Yuan Joins IMF Reserves in First Revision Since 1999 Link

Link to Fitch Statement