Halister News

(Bloomberg) -- Singapore will pursue more cases of complex transnational money-laundering offences as part of further steps to enhance measures to combat illicit money flows, government says Tuesday in statement.

• NOTE: Ministry of Finance, Ministry of Home Affairs, Monetary Authority of Singapore make joint statement after Financial Action Task Force publishes assessment of nation’s measures to fight money laundering, terrorism financing
• “Singapore has invested substantial efforts over the years to enhance its AML/CFT regime, and remains fully committed to continue doing so": statement
• Other areas the govt will address include enhancing accessibility, transparency of information on beneficial ownership of legal persons, limited liability partnerships, trusts; improved risk assessment for all legal persons and non- profit sector; closer supervision of non-financial sector
• Singapore’s regime to combat terrorism financing is robust and ‘‘was not accorded sufficient credit’’ by FATF, which cited the lack of criminal prosecutions and convictions
• NOTE: FATF report based on evaluation of Singapore’s measures to combat money laundering, financing of terrorism during a visit by examiners on Nov. 17-Dec. 3; doesn’t take into account convictions that took place after that

(Bloomberg) -- Singapore should address “moderate gaps” that exist in its measures to fight money laundering, according to Financial Action Task Force report published Tuesday.

• Inherent risks faced by Singapore as a global financial center and system vulnerabilities not “sufficiently reflected” in government’s risk assessment
• NOTE: Report based on evaluation of Singapore’s measures to combat money laundering, financing of terrorism during a visit by FATF examiners on Nov. 17-Dec. 3
• Nation’s coordination in fighting money laundering and terror financing flows is “highly sophisticated and inclusive of all relevant authorities”
• “Foreign predicate offences” constituted 66% of all money- laundering investigations, 27% of convictions, FATF says, citing Singapore data between 2008 and 2014
• FATF recommended improvements including: the comprehensive risk assessment of all types of legal persons to identify money laundering, terrorism financing risks; develop policy to address those risks
• NOTE: FATF’s review on Singapore took place before Monetary Authority of Singapore announced closure of BSI in cases related to 1MDB in May; MAS rebuked 4 banks for lapses in anti-money laundering controls in July
• NOTE: FATF is inter-governmental body established in 1989 to set standards for measures to fight money laundering, terrorist financing, other threats to international financial system
• Singapore will take further steps to strengthen regime to combat illicit flows, govt and MAS say in separate statement

(Bloomberg) -- With the ECB CSPP having acquired a further EU2.3b of bonds last week, focus is likely to turn to the start of the BOE’s corp bond buying program today. Recent Deutsche Bank and Lufthansa headlines highlight some of the challenges facing credit mkt sentiment, but central banks’ backstop bids should alleviate capitulation fears, Bloomberg strategist Simon Ballard writes.

• ECB bought EU2.316b of bonds last week vs EU2.657b prior week as implicit backstop bid continues; now holds cumulative EU27.868b
  • From today, BOE CBPS will purchase up to GBP10b of GBP corp bonds of ‘firms making a material contribution to the UK economy’
  • Program has been well telegraphed, so impact may be largely priced into spreads already, but nevertheless should still see net positive (tightening) reaction across the asset class
• Political uncertainty intensifying in U.S. election outlook; may damp allure of U.S. corp credit risk at time of tentatively improving corp credit macro fundamentals; first Clinton/Trump election debate seen as a ‘win’ for Clinton
• Risk Appetite Model eases back as uncertainty creeps back in
• Bloomberg Barclays Eur-Agg Corporate index closed yday at 112bps (unchanged); Bloomberg Barclays Eur HY index closed at 411bps (+4bps)
• CDX IG closed -0.5bps at 73.11 in overnight session; iTraxx Asia Ex Japan IG currently -4.2bps at 115.60 and iTraxx Australia quoted +0.6bps at 104.58

NEWS

• Corporate News
• Wolseley FY Revenue, EPS In Line; Announces U.K. Repositioning
• Thomas Cook Keeps FY Profit Outlook, Winter Bookings In Line Y/y
• Samsung Customer in China Reports Battery Fire in New Note 7

• Financial News
• Deutsche Bank rights issue ‘looks inevitable’: Citigroup
• Commerzbank to announce 9,000 job cuts, dividend freeze: HB
• ADB Raises China Growth Est. on Fiscal, Monetary Stimulus
• Julius Baer Says Singapore Court Dismisses Accumulator Claim

• Credit Rating News
• S&PGR Afrms Weichai ‘BBB’ Rtg; Otlk Negative; Rtgs Off CWatch
• S&PGR Affirms Jamaica ‘B/B’ Ratings; Outlook Remains Stable

• Other News
• BlackRock Issues Warning on Treasuries as Fed Moves Toward Hike
• Clinton, Trump Draw Stark Contrasts With Sharp Debate Attacks
• Perry Capital Closing Flagship Fund After Almost Three Decades

ANALYST VIEWS

• Deutsche Bank is too big to fail. We understand the market’s reaction to the news - after all, we don’t like uncertainty - but the weakness should be seen as an opportunity: creditmarketdaily.com
• Regard relief rallies into the mid-60s in Main and low 300s (Xover) as opportunities to buy protection... confirms overall neutral tactical stance in cash. Suggest investors bide their time on outer rim of the CSPP space, as the coming weeks might bring along opportunities in IG subs and EUR HY: Commerzbank

NEW ISSUES

• Lower Saxony EU350m 0% 8/2024 Tap MS -17
• EnBW $300m 60NC5.5 Bond 5.125% at Par
• Norwegian Air Shuttle EU60m 7.25% 2019 Tap 104
• 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) -- Draghi’s call for actions by national governments to support economic growth will probably not gain traction, with ECB likely to extend QE program, ABN Amro head of macro research Nick Kounis writes in a client note.

• Without government action, euro zone risks being stuck with low growth and low interest rates
• ECB wants to see structural reforms as well as fiscal stimulus
• Draghi made clear in testimony yesterday that QE “exit strategies” were not being discussed

--GARFIELD REYNOLDS

(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

UPGRADES

• GHCL
  • Long-term bank facilities raised to A- from BBB+ at Care
  • Cites healthy operating performance of its soda ash division

• Keimed
  • LT bank facilities raised to A- from BBB+ at Care
  • Cites healthy growth in total operating income, investment made by Mitsui & Co. (Asia Pacific) Pte in form of equity

• PNC Infratech
  • LT bank facilities raised to AA- from A+ at Care
  • Cites strong growth in turnover, profitability

• Vijaykant Dairy
  • LT bank facilities raised to BBB- from BB+ at Care
  • Cites consistent revenue growth, improved financial performance

(Bloomberg) -- It’s “dangerous” to aggressively buy 10-year JGBs as BOJ is unlikely to allow a significant drop in yields as central bank said it would keep yield near zero percent, according to Bank of America Merrill Lynch.

• Should BOJ allow yields to fall excessively, it would become difficult to gauge what central bank wants to do about yields, says Shuichi Ohsaki, chief Japan rate strategist at BofAML
• Market participants are nervous ahead of 40-year JGB sale today; while many expect auction’s results to be good, they may be refraining from buying: Ohsaki; expects outcome to be slightly weak to “okay” amid an increase in issuance amount
• Yield on 0.1% govt bond due Sept. 2026 slips 1 bp to -0.070%

(Bloomberg) -- Yuan stable with focus on Clinton-Trump debate in the U.S.; Trump says China devaluing yuan. Follow debate here.

• Trump election win could slow China reforms and cause more yuan weakness, Standard Chartered analysts Ding Shuang and Eddie Cheung wrote in note yday
• PBOC to maintain stable yuan basket ahead of week-long national holiday starting Oct. 1 to avoid self-reinforcing sharp depreciation of currency, Scotiabank Asia Gao Qi says
  • Central bank will remain resistant to broad monetary easing including RRR cuts; USD/CNY spot and fixing to stay below 6.70 this week
• CNY unchanged at 6.6694 per dollar; CNH up 0.04% at 6.6806
  • PBOC strengthens yuan fixing 0.15% to 6.6646
• Swift Global CNY payments fall to 1.86% in Aug. vs 1.90% in July
• Aug. industrial profits +19.5% y/y vs +11.0% in July, biggest growth in 3 yrs
  • Related: Early indicators signal factory pickup, business optimism
• China said to scrap 50% stock allocation requirement for QFII investors
• Yuan’s long march to global currency faces obstacles after SDR inclusion
• China junk bonds hottest in five years as authorities stem defaults
• PBOC sells 80b yuan reverse repos
  • PBOC gauges demand of 28-, 14- and 7-day reverse repos before and after the Oct.1-7 holiday: trader
• Yield of 2.74% govt bond due Aug 2026 little changed at 2.715%