HALISTER: Vale 2Q Net Income -34% Y/y to $1.11b

Vale 2Q Net Income -34% Y/y to $1.11b

(Bloomberg) -- According to regulatory filing.
  • Sales -5% y/y to $6.63b vs avg est. in USD of $6.59b, according to 11 analysts surveyed by Bloomberg
  • Adj. Ebitda +8% y/y to $2.38b vs avg est. in USD of $2.24b, according to 12 analysts surveyed by Bloomberg
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
VALE5 BZ (Vale SA)

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HALISTER1: AUCTION PREVIEW: BTPs Offer Value vs SPGBs as Demand for 5Y Seen

AUCTION PREVIEW: BTPs Offer Value vs SPGBs as Demand for 5Y Seen

(Bloomberg) -- Italy to sell 0.45% 06/2021 for EU1.5b-EU2b, 1.25% 12/2026 for EU4b-EU4.5b, as well as CCTeu 07/2023 for EU1.5b-EU2b at 11am CET.
  • Analysts highlight value vs SPGBs, support from large upcoming coupons and redemptions; mixed views on new 10Y roll
  • BBVA (Jaime Costero)
    • 5Y has underperformed ~2bps vs peers, now looks cheap vs fitted curve; recommend buying the bond as 5s10s steepener boxed vs SPGB flattener
    • New 10Y offers ~7bps pick-up in the grey market; current roll cheap as prior roll was ~4bps with higher yields and a steeper curve; curve interpolation puts fair value of spread ~5.2bps
  • Mizuho (Peter Chatwell)
    • 5Y likely to find demand from investors looking to switch out of Spain into Italy, possibly taking profit on the reverse
    • New 10Y roll looks slightly rich, levels below 7bps can only be justified if a squeeze materializes
      • This may be justified given pending redemption flow, evident excess demand for 10Y periphery as seen in last week’s 10Y Spanish syndication
    • 10Y BTP/bund spreads look too wide relative to fundamentals, expectations of QE extension in September; tightening position looks good value in the event of current levels of market distress dissipating
  • Commerzbank (Rainer Guntermann)
    • BTPs are struggling to regain tightening momentum vs core, semi-core peers as banking, political concerns take their toll
    • Recent widening vs 10Y SPGBs is striking, current on- the-run 10Y BTP at the widest vs Spain since its launch in March
    • 10s30s BTP trades close to YTD lows, mirroring dynamics observable on Spanish curve; these valuations should generate sufficient interest as to limit spillovers into secondary markets
    • Large coupon and redemption payments from Italy for a combined EU33b due next week may also have to be put to work
  • UniCredit (Elia Lattuga)
    • BTPs have underperformed peers over recent sessions; supply pressure added to tension on financials, which spilled over into BTPs
    • In outright terms, BTPs have held up well, with 5Y and 10Y yields not too far off the YTD lows; 2s10s spread only 3bps from recent lows, while 5s10s has more room to flatten in the current environment
    • 5Y looks cheap vs the 03/2021 and 03/03022 on the barbell, sits on top of the past 3-mo. range; also offers attractive pick-up vs SPGB at ~12bps
    • New 10Y offers around 8bps-9bps pick-up vs old 10Y, which is fair value; 10Y sector looks more attractive on the curve after cheapening pressure ahead of supply
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
UCG IM (UniCredit SpA)

People
Elia Lattuga (UniCredit SpA)
Jaime Costero (Banco Bilbao Vizcaya Argentaria SA)
Peter Chatwell (Mizuho Financial Group Inc)
Rainer Guntermann (Commerzbank AG)

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UUID: 7947283

HALISTER1: EU CREDIT DAILY: Earnings Fillip for Risk; AstraZeneca Beats

EU CREDIT DAILY: Earnings Fillip for Risk; AstraZeneca Beats

(Bloomberg) -- Largely positive quarterly earnings headlines and the Fed’s guarded optimism are helping boost sentiment ahead of the traditional August lull, Bloomberg strategist Simon Ballard writes.
  • Investors need to remain cognizant of any divide between positive headline earnings numbers and less robust underlying revenue and sales growth data
    • EA shows S&P500 current quarter sales surprise running at +1.21%; earnings surprise +5.76%
    • Underlying Q2 sales growth +1.02%; earnings growth -3.0%
  • Compressed credit spreads and well anchored yield curves underscore investor bias for bottom-up, fundamental investment research, issuer differentiation
  • CDX IG closed -0.4bps at 79.20 in overnight session; iTraxx Asia Ex Japan IG currently -0.7bps at 119.94 and iTraxx Australia quoted -2.2bps at 109.12
NEWS
  • Corporate News
  • AstraZeneca 2Q Core EPS Beats Estimates, Keeps 2016 Outlook
  • Telefonica 2Q Oibda EU3.92B; Est. EU3.9B
  • Danone First-Half Earnings Top Estimates on Price Increases
  • SoftBank 1Q Profits Rise as Japan Telecom Ops Offset Sprint
  • BAT 1H Adj. Operating Profit, Adj. Diluted EPS In Line
  • Diageo FY Sales in Line With Ests.; Confident on FY Targets
  • Samsung Electronics 2Q Net 5.83t Won; Est. 5.64t Won
  • Virgin Australia 4Q Total Capacity Down 4.5%
  • Hyundai Heavy Rises on Biggest Quarterly Profit in Three Years
  • Suncor Reports Quarterly Loss as Production Curtailed by Fire
  • Prosegur 1H Net EU80.7M Vs EU77.6M a Year Earlier
  • Malaysia Airports 2Q Net 9.38m Ringgit Vs 19.88m Loss Y/y
  • Nexans Swings to 1H Profit, Sees ‘Unsettled’ Environment in 2H
  • Renault First-Half Profit Rises 41% With 10 New Cars Planned
  • Carrefour 1H Recurring Operating Income Beats Ests.
  • Schneider Electric Upgrades FY Adjusted Ebita Margin Target
  • Total Profit Beats Ests as Cost Cuts Deepen Amid Oil Slump
  • Shell Profit Drops 72% on Lower Oil, Weaker Refining Margins
  • Centrica’s First Half Profit Drops Amid Weak Commodity Prices
  • Repsol 2Q Adj. Net EU345m; Est. EU342.1m
  • BT 1Q Sales, Adj. Ebitda In Line With Ests.; Confirms Outlook
  • Rolls-Royce 1H Profit Beats Est; Outlook Unchanged
  • BAE Systems 1H Profit Misses Est; Forecast Reiterated
  • Smith & Nephew 1H Rev. In Line; CEO Confident on Prospects
  • Sky FY Revenue Beats; Says On Track to Achieve Synergy Targets
  • VW Brand’s First-Half Profit Falls 36% Amid Emissions Scandal
  • Nissan Profit Declines on Yen, Mitsubishi Motors Posts Loss
  • Financial News
  • Credit Suisse Posts Surprise Profit in Second Quarter
  • Lloyds 1H Underlying Profit Beats Estimate; Plans More Cost Cuts
  • BNP Profit Is Little Changed as Low Rates Offset Bond Gains
  • Nomura’s First-Quarter Profit Declines Less-Than-Estimated 32%
  • Macquarie Reiterates Flat 2017 as Quarterly Profit Slips
  • Schroders 1H Adj Pretax, Inflows Drop, Sees Impact on Demand
  • AIB 1H Pretax EU1B vs EU1.2B; Bank Repays Irish State EU1.8B
  • Credit Rating News
  • S&P Outlk To Stable Fm Neg On Alta Wind Hldgs; ’BBB-’ Rtg Afmd
  • Fitch: Expected Shift in China’s Corporate Profiles Optimistic
  • S&PGRBulletin: Woolworths Ratings Unaffected By Restructuring
  • Fitch Affirms ANZNZ’s Covered Bonds at ’AAA’; Revises D-Cap
  • Other News
  • Italians’ Nest Eggs Risk Cracking as Bank-Rescue Plans Mulled
  • Brexit to Weaken U.K. Housing in Near-Term, Nationwide Says
ANALYST VIEWS
  • Santander is experiencing inevitable pressure on the net interest margin, but largely compensating for it with a combination of higher fee income and lower loan impairments: CreditSights
NEW ISSUES
  • EIB EU400m 0.875% 9/2024 Tap at MS -24
  • Rentenbank EU300m 0.625% 2/2030 Tap at MS -18
  • 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.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
AZN LN (AstraZeneca PLC)

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UUID: 7947283

HALISTER: Total 2Q Adj. Net $2.2b Beats Ests.; Keeps Div. at EU0.61/Share

Total 2Q Adj. Net $2.2b Beats Ests.; Keeps Div. at EU0.61/Share

(Bloomberg) -- 2Q adj. net income $2.2b vs est. $1.82b; adj. net operating income from segments $2.52b vs est. $2.14b.
  • Adj. operating income from Upstream $1.13b down 28% y/y; from Refining & Chems $1.02b down 25% y/y; from Marketing & Services $378m down
  • 2Q div. matches Bloomberg forecast
  • Operating cash flow before WC changes $4b falls 25% y/y
  • CEO Patrick Pouyanne says that efforts to cut operating costs “continuing to bear fruit”; co. will surpass $2.4b cost reduction target for 2016
    • 1H organic investments $8.7b; seen in range $18b-$19b for 2016
  • 2Q LNG sales 2.76mt rise 15% y/y
  • Net debt at end-1H $29.8b
  • Call 3:30pm CET, +1 212 444 0412, pw:9046552; webcast here
  • NOTE: Sees 2Q preview here
Statement
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
FP FP (TOTAL SA)

People
Patrick Pouyanne (TOTAL SA)

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UUID: 7947283