HALISTER1: AUCTION PREVIEW: New 5Y Bobl Seen Yielding Below Depo Rate

AUCTION PREVIEW: New 5Y Bobl Seen Yielding Below Depo Rate

(Bloomberg) -- Germany to sell EU5b 10/2021 at 11:30am CET; analysts highlight this is the first bobl sale yielding below depo rate, hence not eligible for QE.
  • Speculation of ECB policy PSPP parameter changes may offer some support, fair value in RV though mixed views on the sector vs curve
  • Citi (Saumesh Dutta)
    • First bobl auction at below depo rate levels; in RV, the 5Y sector looks cheap vs fitted curve, but looks rich on 2s5s10s; cross-market, has underperformed vs semi-core bonds over the past month
  • Mizuho (Antoine Bouvet)
    • No 5Y supply for past 1 1/2 months, compared with the usual 1-month break between reopenings, should help build up demand for the auction
    • The sale will need to compete for demand with tomorrow’s 5Y FRTR
    • In RV, fair value for roll is around +4bps in yield terms, which is consistent with grey-market pricing yesterday
  • Commerzbank (David Schnautz)
    • New bobl trades at a spread of ~3.5bps vs 04/2021, leaves new bond outright yield around –53bp; not attractive, well below depo rate, not eligible for QE
    • ECB’s PSPP rulebook may well be re-written, may address scarcity issues by relaxing depo-rate restriction
    • “Front-running” a possible relaxation of this restriction has already taken place to some extent as bund curve ASW spreads have backed up for “squeezed” maturities relative to shorter tenors
    • Speculation that PSPP buying changes may soon start to slide down the bund curve should be supportive for today’s auction; may buck recent trend of technically uncovered auctions
  • UniCredit (Elia Lattuga)
    • Recent sale of new 10Y bund attracted tepid interest, auction was technically uncovered; demand for 5Y has been more solid at the recent auctions
    • 14bps of cheapening registered over past two weeks should also help; 5Y sector on the curve has richened on 2s5s10s as recent bearish move has come with a sizable steepening of 5s10s
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Antoine Bouvet (Mizuho Financial Group Inc)
David Schnautz (Commerzbank AG)
Elia Lattuga (UniCredit SpA)
Saumesh Dutta (Citigroup Inc)

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UUID: 7947283

HALISTER1: EU CREDIT DAILY: Spreads Consolidating; Electrolux Beats

EU CREDIT DAILY: Spreads Consolidating; Electrolux Beats

(Bloomberg) -- With the combination of declining seasonal credit mkt activity, a mixed corp earnings picture and recent geopolitical events still fresh in the mind, it is unsurprising corp bonds are currently experiencing a degree of spread consolidation, Bloomberg strategist Simon Ballard writes.
  • Earnings focus this morning likely on Electrolux AB and Iberdrola SA; Morgan Stanley last of U.S. bank majors to report later along with Intel and American Express
    • Macro data radar includes euro area consumer confidence, U.K. employment and German PPI
  • Risk Appetite Model shows modest seasonal consolidation as spread dispersion edges higher
  • CDX IG closed +0.3bps at 76.35 in overnight session; iTraxx Asia Ex Japan IG currently +1.2bps at 120.88
NEWS
  • Corporate News
  • Electrolux 2Q Operating Profit Beats Estimates, Sales Miss
  • SAP Profit Tops Estimates as Clients Move to New Software Suite
  • Fortum 2Q Sales Beat Ests; Nordic Demand to Grow 0.5% Annually
  • TalkTalk 1Q Rev. Flat, Keeps FY Guidance Unchanged
  • Johnson Matthey FY Outlook at Constant Rates Remains in Line
  • Villeroy & Boch 1H Revenue Rises 3%; Confirms 2016 Targets
  • Clinigen Says FY Revenue Grew 87% Y/y, Debt Decreased
  • VW Emissions-Cheating Claims Reach Back Further in New Lawsuits
  • Severn Trent Progress Continues With Water Plus Joint Venture
  • Iberdrola 1H Ebitda EU3.89B; Est. EU3.85B
  • Financial News
  • Citigroup’s Fujita Resigns as Japan Vice Chairman, Memo Shows
  • Nordea’s Interest Income Drops as Negative Rates Take Toll
  • Monte Paschi Weighing Sale of Antonveneta to UBI: Corriere
  • Pimco Names Man Group’s Chief Emmanuel Roman as Its New CEO
  • Credit Rating News
  • Moody’s Expects UK Banks’ Solvency Ratios To Remain Solid
  • SoftBank Ba1 Rating Affirmed at Moody’s; Can Handle ARM Impact
  • S&PGR Affirms India EXIM ’BBB-’ Issue Rating On Notes
  • Other News
  • Brexit Means Business as Companies Turn to Consultants for Help
  • Donald Trump Formally Nominated as GOP Presidential Candidate
ANALYST VIEWS
  • Chinese industrial sector is no longer the domain of heavy industry. Recent $ bond issuers include a car rental firm, a sportswear maker and a manufacturer of health supplements. Does this reflect China’s shift to new economy?: CreditSights
  • We let the process of the ECB’s mega grabfest play out supporting the corporate bond market over the summer months as the unlimited buying power of the central bank sucks the life out of the market: creditmarketdaily.com
NEW ISSUES
  • KfW EU1b 1.25% 7/2036 Tap MS -15
  • Spain EU6b 10Y MS +95
  • Wells Fargo GBP1b 9Y Senior UKT +130
  • WL Bank EU250m 0.75% 2/2026 Covered Tap MS -10
  • 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
ELUXB SS (Electrolux AB)

People
Donald Trump (Trump Hotels & Casino Resorts Inc)
Emmanuel Roman (Man Group PLC)

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UUID: 7947283

HALISTER: Citigroup’s Fujita Resigns as Japan Vice Chairman, Memo Shows

Citigroup’s Fujita Resigns as Japan Vice Chairman, Memo Shows

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
C US (Citigroup Inc)

People
Tsutomu Fujita (Citigroup Global Markets Japan Inc)
Luke Randell (Citigroup Global Markets Japan Inc)
Mika Nemoto (Citigroup Japan Holdings Corp)

Topics
Financial Firm Departures
Management Changes
Who's News - People

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UUID: 7947283

HALISTER: Pimco Names Man Group’s Roman CEO to Replace Hodge on Nov. 1

Pimco Names Man Group’s Roman CEO to Replace Hodge on Nov. 1

(Bloomberg) -- Pimco names Man Group’s Manny Roman as its next CEO to replace Douglas Hodge on Nov. 1.
  • Current CEO Hodge to become Managing Director and Senior Advisor
  • Says Roman has almost 30 years experience in investment industry
  • Roman to be based at Pimco HQ in Newport Beach, California
NOTE: Allianz Sees Pimco Hiring in Pivot From Bill Gross’s Former Fund
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
21429Z US (Pacific Investment Management Co LLC)
EMG LN (Man Group PLC)
ALV GR (Allianz SE)

People
Douglas Hodge (Pacific Investment Management Co LLC)
Emmanuel Roman (Man Group PLC)
Bill Gross (Pacific Investment Management Co LLC)
William Gross (Janus Capital Management LLC)

Topics
Who's News - People
Management Changes

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UUID: 7947283

(2) *MAN GRP CEO LEAVING TO BECOME NEW CEO AT PIMCO

*MAN GRP CEO LEAVING TO BECOME NEW CEO AT PIMCO

Alerts: HALISTER, HALISTER1
Source: BN (Bloomberg News)

Tickers
21429Z US (Pacific Investment Management Co LLC)
EMG LN (Man Group PLC)
ALV GR (Allianz SE)

People
Emmanuel Roman (Man Group PLC)

Topics
Financial Firm Departures
Who's News - People
Management Changes

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UUID: 7947283

HALISTER1: USD/MYR Extends Gain on CPI; U.S. May Look to Seize 1MDB Assets

USD/MYR Extends Gain on CPI; U.S. May Look to Seize 1MDB Assets

(Bloomberg) -- USD/MYR climbs 0.7% to two-week high at 4.0325, approaching 50-DMA at 4.0556.
  • June CPI rose 1.6% y/y vs est. 1.8%
  • U.S. federal prosecutors are expected to file lawsuits as soon as Wednesday morning to seize assets allegedly purchased with money from 1MDB, WSJ reports
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER: SAP 2Q Non-IFRS Operating Profit Beats Est.; Sticks to Outlook

SAP 2Q Non-IFRS Operating Profit Beats Est.; Sticks to Outlook

(Bloomberg) -- 2Q non-IFRS total rev. EU5.24b; est. EU5.22b (20 analysts)
  • 2Q non-IFRS software rev. EU1.04b; est. EU984m (15 analysts)
  • 2Q non-IFRS new cloud bookings EU255m vs EU199m
  • 2Q non-IFRS cloud subscription/support rev. EU721m; est. EU715.7m (14 analysts)
  • 2Q non-IFRS cloud and software rev. EU4.36b; est. EU4.31b (13 analysts)
  • 2Q non-IFRS operating profit EU1.52b; est. EU1.45b (15 analysts)
  • 2Q non-IFRS operating margin 28.9%; est. 27.6% (15 analysts)
  • Confirms 2016 outlook:
    • Sees 2016 non-IFRS cloud subscriptions and support rev. EU2.95b-EU3.05b (constant FX)
    • Sees 2016 non-IFRS cloud & software rev. up 6%-8% (constant FX)
    • Sees 2016 operating profit EU6.4b-EU6.7b (constant FX)
  • Says on actual FX vs constant FX:
    • Sees 3Q non-IFRS cloud & software rev. growth rates, non-IFRS operating profit growth at actual currency in range of -1ppt to +1ppt
    • Sees 2016 non-IFRS cloud & software rev. growth rates, non-IFRS op profit growth rates at actual currency in range of 0ppt to -2ppt
  • Statement, preview here
  • Conference call July 20, 2pm CET, domestic 213 536 4059, international +44 203 059 8131, pin for both 8341017, 14999
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
SAP GR (SAP SE)

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UUID: 7947283