Halister News

--BEN SCENT

(Bloomberg) -- There’s a risk that JGB yields will drop again as all market catalysts will be out after Sept. 21 decisions by BOJ and Fed, so investors should buy JGBs on dips at 20-year auction, according to Deutsche Securities.

• With auction approaching at highest level in fiscal 2016, Deutsche expects some buying from investors that are looking to buy 20-year JGBs at a yield of about 0.5% this fiscal year, chief strategist Makoto Yamashita writes in note today
• It’s difficult to anticipate how far JGB yield curve will steepen even if BOJ makes bond purchases more flexible: Yamashita; says concerns over U.S. rate hike in Sept. persist, and some investors are probably waiting for BOJ and Fed’s decisions before buying
• While BOJ desires a degree of steepening, it has said that increased issuance of corporate bonds in super-long sector is one effect of its negative rate policy; BOJ is unlikely to be looking for uninterrupted steepening
• 20-year yield up 0.5 bp at 0.460% ahead of 20-year auction tomorrow

(Bloomberg) -- Offshore yuan 1-month Hibor surging above 3-month in a pattern that may replicate January, with funding pressure likely ahead of China holidays, Bloomberg strategist Mark Cranfield writes.

• 1-month Hibor exceeded 3-month by more than 500 bps in Jan., peaking above 15%; click here for chart
• Mid-Autumn festival is Sept. 15-17, National Day holiday is Oct. 1-7
• 1-month CNH Hibor +178 bps to 5.02%, highest since Feb.
• 3-month +95 bps to 4.21%, highest since March
• NOTE: Mark Cranfield is an FX strategist who writes for First Word. The observations he makes are his own and are not intended as investment advice.

(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

DOWNGRADES

• Bareilly Highways
  • Senior, subordinated debt cut to D from B+ at Care
  • Cites delays in debt servicing

• Creative
  • Long-term loan facilities cut to D from C at Crisil
  • Cites stretched liquidity profile due to continuous losses

• Kalyani Forge
  • LT loan facilities cut to BBB+ from A- at Crisil
  • Cites declining operating profitability, slower-than- expected ramp-up in operations post capex

UPGRADES

• Asirvad Microfinance
  • NCDs, bank facilities raised to A from A- at ICRA
  • Cites improvement in risk profile of parent Manappuram Finance

• Associated Power
  • LT bank facilities raised to BBB+ from BBB- at Care
  • Cites significant growth in scale of operations

• GreenPark Hotels
  • LT bank facilities raised to A- from BBB+ at Care
  • Cites moderate growth in total operating income, improvement in profitability margins

• Redstone Granito
  • LT bank facilities raised to BB+ from BB at Care
  • Cites improvement in profitability, capital structure

• R.V. Rail
  • LT loan facilities raised to A- from BBB+ at Crisil
  • Expects business risk profile of Jekay group to improve over the medium term due to increased government spending on railway infrastructure

• Shivalik Engineering
  • LT bank facilities raised to BBB-(SO) from BB+(SO) at Care
  • Cites credit enhancement in the form of corporate guarantee by Shivalik Power

• Trent
  • LT bank facilities raised to AA+ from AA at Care; NCDs also revised to AA+ from AA
  • Cites continued improvement in operational, financial performance

(Bloomberg) -- Government bond yields have broken above their recent ranges and may be on the cusp of a larger correction as they “may have become irrationally low this year, and driven to extremes in the wake of Brexit,” writes Greg Gibbs, director of Amplifying Global FX Capital, in note to clients.

• Subtle policy shifts by BOJ and ECB point to their reluctance to deliver more QE, as well as dissatisfaction with low and negative longer-term bond yields
  • Fed is also creeping closer to another rate hike: Gibbs
• Rise in Japanese long-term yields since July 29 and more recently after speeches by BOJ’s Kuroda and Nakaso may have been the most important catalyst of higher global bond yields
• BOJ appears to be aiming for higher longer-term yields, balanced by lower short-term yields
• BOJ would accept a bigger rise in bond yields (curve steepening without the twist) if it coincided with a weaker JPY, as it would help lift inflation expectations
• JGB 10-year yield rises to -0.015% from -0.020% on Sept. 12

(Bloomberg) -- USD/KRW 1-month NDF rose to 1,109.34 on Friday night as the dollar rose broadly vs peers and S&P 500 sank 2.5% on heaviest volume in two months.

• The NDF’s level compares with onshore close for USD/KRW at 1.099.80