Halister News

(Bloomberg) -- Elis cut to hold from buy at Deutsche Bank; sees M&A upside potential, cautious on French trends.

• Likes business model, notes French tourism weaker than expected, economy unsupportive
• Elis has identified further M&A; likely to be part-equity financed given M&A growth has come at expense of higher leverage
• Cuts estimates for 2016 Ebitda by 0.8%, EPS by 2.2%; 2017 estimates cut by 1.9% and 4.3% respectively
• Estimates organic growth ex. small M&A of 2.1% in 2016, 1.8% in 2017

DATA

• Elis falls as much as 5.6%, volume is 63% of 3-month average
• Stock has fallen 6.5% month-to-date vs a 2% fall in the Stoxx 600 Industrial Goods and Services index; is down 3.2% YTD vs a 1.6% rise in the SXNP index
• Trades on 13.5x next year’s earnings vs 15.7x for the SXNP index according to Bloomberg data

(Bloomberg) -- Weakness that began to creep back into risk assets in the latter stages of yesterday’s session has gained momentum overnight, with Deutsche Bank again being the source of market concerns, Bloomberg strategist Simon Ballard writes.

• News of hedge funds pulling money from DB is intensifying pressure on the lender, driving haven flows this morning
  • EUR credit has held up reasonably well thus far; investors are watching for any signs of banks cutting lines from Deutsche as an indicator of more significant risk off move, though there’s currently no evidence of this
• Financial sector likely to overshadow Friday macro data (U.S. core PCE, U. Michigan consumer sentiment) and maintain weak bias into weekend
• Risk Appetite Model shows vol stays high even as spread dispersion eases slightly
• Bloomberg Barclays Eur-Agg Corporate index closed yday at 114bps (unch); Bloomberg Barclays Eur HY index closed at 412bps (-4bps)
• CDX IG closed +1.0bps at 78.21 in overnight session; iTraxx Asia Ex Japan IG currently +6.9bps at 118.38 and iTraxx Australia quoted +2.1bps at 104.92

NEWS

• Corporate News
• ABB Completes Share Buyback Program, Bought ~$3.5b of Shares
• H&M 3Q Pretax Profit, Gross Margin Slightly Below Estimates
• Trinity Mirror Says FY Profit to Be In Line With Market Ests

• Financial News
• Bank Stocks Decline in Asia as Deutsche Bank Concerns Increase
• Greece’s NBG to Join NPL Servicing Platform: Kathimerini
• Raiffeisen May Want to Extend Deadline in Polish Unit Sale
• ING Said to Cut Thousands of Jobs, Financieele Dagblad Reports
• RBS Resurrects NatWest Markets as Part of BOE Ringfencing Plans

• Credit Rating News
• Fitch affirms ratings of three Hungarian banks
• Shanghai International Port Lowered to A+ From AA- at S&PGR
• S&PGR Affirms ’BB-’ Ratings On Invepar, Off Watch

• Other News
• Wall Street Says Annual Holiday Rally Isn’t in Cards This Year
• Summers Says New BOJ Policy Frame Work Is in the Right Direction

ANALYST VIEWS

• September has not necessarily been kind to the corporate bond market though it’s managed to eke out some positive performance from a total return perspective. It’s all about Deutsche Bank and the market smells a rat: creditmarketdaily.com
• Most recent concerns on Deutsche Bank might not pose a major problem for broader markets yet but could force action if they turned into a trend; this adds non-negligible tail risks to an already dense lineup of economic and political risk events: Commerzbank

NEW ISSUES

• Amadeus Capital Markets EU500m 4Y MS +38
• Cabot Financial GBP350m 7NC3 Snr Sec Notes 7.5%
• Deutsche Telekom GBP300m 7Y UKT +90
• German Federal States EU1b 10Y MS -16
• Jerrold Finco GBP375m 5NC2 Snr Sec Notes 6.25%
• Lanxess EU500m 5Y MS +50, EU500m 10Y MS +85
• Northumbrian Water Finance GBP300m 10Y UKT +92
• Russian Railways $500m 4Y to Yield 3.45%
• Schoeller Allibert EU210m 5NC2 Snr Sec Notes 8%
• Shaftesbury Carnaby GBP285m 15Y UKT +150
• SNCF Reseau $1b Reg S 3Y MS +37
• Total EU1b PNC6.6, EU1.5b PNC10 Hybrids
• Virgin Media GBP350m 8NC3 Senior Notes 5.5% Area
• 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.