Halister News

(Bloomberg) -- ECB offered “nothing” this week, though QE extension is coming; expect asset purchases to be lifted by EU20b to EU100b per month, depo rate to be cut by 10bps to -0.50% in Dec. meeting, writes RBS strategists including Giles Gale in a client note.

• Draghi said data didn’t warrant a move “for the time being”, highlighted Praet’s analysis that inflation lacks “convincing upward trend”; opening statement also said QE to continue until ECB sees sustained adjustment in path of inflation
• ECB is “too sanguine” on the real data, still expect growth, inflation in Euro zone to disappoint ECB forecasts in coming weeks

(Bloomberg) -- Lack of ECB action yesterday may have disappointed some mkt participants, but there should be no mistaking the strength of current credit market dynamics, Bloomberg strategist Simon Ballard writes.

• Depth of risk appetite highlighted by recent sales of corp issuance at negative yields; demand for long-dated zero-cpn bonds
  • Demand/supply dynamics likely underpinned by ’Goldilocks’ macro environment over coming months, but any medium-term uncertainty over fundamentals, risk asset bubbles, may begin to fuel degree of defensive investment bias
• Asian equities mixed overnight on news of latest N. Korean nuclear test; credit indexes remain firm nonetheless

• Risk Appetite Model edging steadily tighter as spread dispersion evaporates
• Bloomberg Barclays Eur-Agg Corporate index closed yday at 107bps (-1bp); Bloomberg Barclays Eur HY index closed at 359bps (+4bps)
• CDX IG closed -0.3bp at 75.28 in overnight session; iTraxx Asia Ex Japan IG currently -0.7bp at 106.22 and iTraxx Australia quoted -0.1bp at 95.29

NEWS

• Corporate News
• JD Wetherspoon FY Adj. Pretax Beats, YTD Sales Up 4.1%
• EON’s Uniper Float Is Harbinger for More Billion-Euro Writedowns
• Global Ports 1H Net Surges to $113m vs $34.7m Y/y
• TSMC Aug. Sales Rise 40.7% Y/y to NT$94.31 Billion
• Mitsubishi Motors Says Will Prevent Mileage Scandal Recurrence
• China Power, Hub Power JV Gets Pakistan Electricity Gen. License

• Financial News
• Monte Paschi’s Board to Meet by Sunday to Name New CEO
• Yes Bank Falls After $1b Institutional Share Sale Deferred
• Bank Indonesia Sees 2016 Loan Growth at 7%-9% at Year End
• UniCredit Said to Consider Capital Increase of Up to EU10b

• Credit Rating News
• Poland Seen Skirting Another Downgrade as Moody’s Is Kept at Bay

• Other News
• Cracks Are Appearing in Bond Market That Led Record Global Rally
• Crackdown Prompts Mitsubishi UFJ Rethink on Stock Research
• North Korea Says It Tested Nuclear Bomb, Can Miniaturize Weapons
• Alarm Bells Sound on Headlong Rush Into Fringes of Emerging Junk

ANALYST VIEWS

• The corporate bond market is in good shape... There’s plenty of cash to put to work, supply is coming - and will come thick and fast - while returns promise to hold up too: creditmarketdaily.com

NEW ISSUES

• EIB GBP500m 10Y UKT +36
• Iberdrola EU700m 9Y Green Bond MS +32
• Landsbankinn EU500m 3/2021 MS +190
• Telefonica EU1b PNC5.5 Hybrid 3.75%
• AXA $850m PerpNC5.5Y Tier 2 at 4.5%
• PartnerRe Ireland Finance EU750m 10Y MS +105
• Crown Holdings EU600m 8Y, $400m 10Y Notes
• Schaeffler EUR3.59b Equiv Multi Tranche Notes
• 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) -- Current spread between India’s 10-yr govt bond yield and repo rate is about 55 bps, still close to past 5-yr avg of 50 bps, suggesting IGBs haven’t yet fully priced in monetary easing expectations, according to Standard Chartered.

• CPI inflation probably peaked, analysts including Nagaraj Kulkarni write in Sept. 8 note; they see increased likelihood of CPI inflation printing at below 5% during rest of 2H FY17; this poses risk to current call that RBI will keep status quo on rates, as such a drop in inflation may spur a 25 bps cut
• Standard Chartered stays positive on IGBs; revises target on its long 7-yr IGB trade recommendation to 6.60% from 7% and alters stop-loss order to 7.25% from 7.65%; this trade, initiated on July 7, has posted a USD total return of ~4.8%
• Expects RBI to conduct OMO purchases worth at least 800b rupees for rest of FY17
• Yield on 7.68% govt bond due Dec. 2023 down 2 bps at 7.01%

(Bloomberg) -- Danske and Intesa offer ~10% yields, Bankia, Erste and Nordea are value plays as investors should favor lenders with non-EU exposure that can offset negative rates by generating fees and have earnings in dollars, Credit Suisse says in note.

• Also likes banks with the capital to absorb SREP ratio changes
• Notes Basel Committee subgroup of Governors and Heads of Supervision (GHOS) is meeting Sept. 11 to discuss regulation
• Sees GHOS taking a step back, giving comments on some proposed rules that will be positive, delay some until 2017
• Santander, UniCredit, BBVA may rise if GHOS eases off as that should benefit banks that don’t yet meet “go to” CET1 levels or where dividend is in focus
• NOTE: Banks are best QTD performers in SXXP, worst YTD

(Bloomberg) -- EUR yields are now vulnerable to upward pressure near term, although a durable bearish trend won’t develop, BNP Paribas strategists write in client note.

• Despite short-term market adjustment post-ECB, there are still good reasons to remain bullish on core EGBs until year-end
• The most important market driver for the next few months is QE-adjusted net supply, which by the end of the year will be negative by more than EU160b; October, in particular, is strongly negative at minus EU75b
• Real yields could fall further below zero and -- barring a surge in inflation expectations -- nominal yields remain low and may fall from near-term levels
• BNP sees a good opportunity to re-enter long positions after current correction
• Present curve steepening will be temporary

(Bloomberg) -- JPY gains amid an otherwise range-bound G-10 market. Fed governor Brainard’s late addition to a list of speakers on Monday seen by Barclays as a risk event ahead of FOMC on Sept. 21

• USD/JPY slides; BOJ’s Kuroda meets with PM Abe, explains comprehensive review
• Pair pressured lower as macro funds sold spot from 102.40, trader says; exporter sell orders layered upwards from 102.50 to 103.00
• DoubleLine CIO Gundlach warns of Fed hike even with market pricing only 40%
• EUR/USD trapped within cluster of large option expirations between 1.1200 and 1.1300 after ECB inaction yesterday
• EUR/JPY attracting bids for real money accounts seen near 114.50, says trader
• BBDXY down 0.15% to 1,173.90
• 10-year Treasury yield steady at 1.601%
• 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

UPGRADES

• Essel Propack
  • Long-term bank facilities raised to AA from AA- at Care
  • Cites improvement in profitability margins

• India Shelter Finance
  • LT bank facilities raised to A- from BBB+ at ICRA
  • Cites ability of the company to scale up operations

• Jetair
  • LT loan facilities raised to BB+ from BB- at Crisil
  • Cites sharp improvement in business risk profile post re-negotiation of contract with its major customer Jet Airways

• Lifestyle International
  • LT loan facilities raised to AA- from A+ at Crisil
  • Expects company to maintain strong operating performance over the medium-term

• Thermal Powertech
  • LT bank facilities raised to A from A- at Care
  • Cites equity infusion, improved operational performance