HALISTER1: AUCTION PREVIEW: Analyst Views Mixed on Spain Relative Value

AUCTION PREVIEW: Analyst Views Mixed on Spain Relative Value

(Bloomberg) -- Spain to sell 0.75% 07/2021, 4.65% 07/2025, 1.95% 07/2030 for EU4-5b, as well as 1.8% I/L 11/2024 for EU250-750m, at 10:30am CET.
  • Mixed view on relative value from analysts; cross-market vs Italy has seen some concession, though this comes as strong post-election outperformance
  • Barclays (Huw Worthington)
    • 07/2021 has richened vs peers to most expensive levels since March; cross-market has outperformed bunds by ~38bps, Italy by ~19bps following recent elections
    • 07/2025 has been a strong performer on SPGB curve, advancing by ~3bps in recent months to richest levels in the bond’s history; following post-election rally, has seen ~6.5bps of concession vs Italy
    • 07/2030 has cheapened steadily on the curve, lagging peers by ~10bps, though this came from very rich levels
  • Citi (Aman Bansal)
    • Spreads vs Germany have been resilient in the face of event risk, supported by better than expected election result
    • Cross-market, constructive on Bonos vs BTPs given banking concerns, upcoming referendum in Italy
    • In RV, 07/2021 has actually richened on the microfly; better value in 07/2025 which has cheapened vs peers over past 10 months
    • 15Y sector overall is rich vs fitted curve; however, auction bond is least rich in the sector, prefer switching from 10/2028s to 07/2028s
  • Mizuho (Antoine Bouvet)
    • 5Y Spain still trades with positive yield; bonds in this area trade special on repo (by 10-20bp), hence offering non-negligible carry
    • Markets have been ignoring re-denomination risk and continue to focus on carry, which should bode well for this tap
    • 07/2025 has offered some concession on the curve, which should make supply easier to absorb
    • Optimistic about 07/2030 issue as the sector has been tapped 6 times this year and retained its value on the curve
  • SocGen (Marc-Henri Thoumin)
    • Both shorter maturities look rich against other SPGBs, expect limited interest in both these issue
    • While 07/2030 has seen no particular concession, 15s30s Spain looks too flat; expect this to reverse after the auction
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Aman Bansal (Citigroup Inc)
Antoine Bouvet (Mizuho Financial Group Inc)
Huw Worthington (Barclays PLC)
Marc-Henri Thoumin (Societe Generale SA)

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UUID: 7947283

HALISTER1: EU CREDIT DAILY: Gates Go Up; M&S Misses, Danone Buys Milk

EU CREDIT DAILY: Gates Go Up; M&S Misses, Danone Buys Milk

(Bloomberg) -- While there are no meaningful signs of investor capitulation, the corporate bond space does appear to be in defensive mode, Bloomberg strategist Simon Ballard writes; short-dated, low-beta investment-grade products may remain the asset class of choice for now.
  • Few investors seem to be advocating buying higher-yielding, higher-risk assets yet, reflecting the lack of certainty on the political and macroeconomic outlooks
  • GBP risk assets likely to remain laggards as markets continue to feel impact of Brexit
    • Fund managers installing gates on property funds likely to further undermine GBP credit-market sentiment over coming days
  • Fed minutes overnight highlighted concerns over global growth; focus now turns to Friday’s jobs report
  • Risk Appetite Model: Who remembers 2010?
  • CDX IG closed -2.4bps to 81.55 in overnight session; iTraxx Asia Ex Japan IG currently -0.7bps to 140.11
NEWS
  • Corporate News
  • Samsung Profit Tops Estimates as S7 Keeps Winning Customers
  • Suedzucker 1Q Revenue Declines, Net Income More Than Doubles
  • M&S 1Q Clothing and Home LFL Sales Miss Estimates
  • Robert Walters 2Q Net Fees Up; Growth Strongest in Europe, Asia
  • Dunelm Sees FY Pretax In Line With Market Estimates
  • Ford 1H China Vehicle Sales Rise 6% Y/y to 577,097 Units
  • Sports Direct FY Ebitda Down 0.5%, Performance Disappointing
  • Nissan Recalls 11,058 Vehicles in Japan on Hybrid System Defect
  • Danone to Buy U.S. Soy-Milk Maker WhiteWave for $10 Billion
  • Financial News
  • Rabobank To Take Additional EU500m Charge For Dutch Rate Swaps
  • Mizuho to Spur Small-Business Coverage With 200 More Bankers
  • CaixaBank Cut Its Repsol Stake to 10% From 12%: Expansion
  • Russia Revokes License of Mytishchi-Based Lender Evrocitibank
  • Credit Rating News
  • S&PGR Affirms ADB Rtgs At ’AAA/A-1+’ With Stable Otlk
  • Australia’s Rating Outlook Cut to Negative From Stable by S&P
  • S&PGR: Major Australia Banks, Select Subs Otlks Now Negative
  • Other News
  • EU Steel Industry Wins Wider Probe of Hot-Rolled-Coil Imports
  • Italy, EU Bank Talks Said Stuck on Sharing Burden With Investors
  • Millionaires Fleeing Negative Yield Targeted by Japan-Swiss Fund
ANALYST VIEWS
  • The EUR/GBP corporate bond markets have had a stellar (1H) 2016. Spreads have held firm for the most part, underlying yields have plummeted, the default rate has stayed below 2%, corporate event risk has been de minimis and returns have excelled: creditmarketdaily.com
NEW ISSUES
  • BNG EU1b 8Y Social Bond MS -3
  • Nestle $600m Reg S 5Y MS +52
  • Rentenbank $300m 1.875% 4/2023 Tap MS +34
  • Rhineland-Pfalz EU750m 2Y MS -15
  • 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)

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UUID: 7947283

HALISTER: Danone to Buy Whitewave for Enterprise Value of About $12.5b

Danone to Buy Whitewave for Enterprise Value of About $12.5b

(Bloomberg) -- Danone to buy WhiteWave for $56.25 a share in cash.
  • Price represents a premium of ~24% over WhiteWave’s 30-day average closing trading price ($45.43)
  • Closing expected by year-end
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
BN FP (Danone SA)
WWAV US (WhiteWave Foods Co/The)

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UUID: 7947283

HALISTER: Macri Sells Argentina to the World’s Media Moguls in Sun Valley

Macri Sells Argentina to the World’s Media Moguls in Sun Valley

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
DIS US (Walt Disney Co/The)
CHTR US (Charter Communications Inc)

People
Henry Kravis (KKR & Co LP)
Mauricio MacRi (Argentine Republic)
Angela Merkel (Federal Republic of Germany)
Brian Roberts (Comcast Corp)
Cory Booker (United States Senate)

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UUID: 7947283

HALISTER1: INSIDE ASIA: Aussie Drops on S&P’s Outlook; Asian FX Firm on Fed

INSIDE ASIA: Aussie Drops on S&P’s Outlook; Asian FX Firm on Fed

(Bloomberg) -- Aussie drops to session low after S&P lowers Australia’s rating outlook to negative from stable, before trimming losses. Most Asian currencies are steady to firmer after June FOMC minutes signal less urgency for Fed rate rises amid uncertain U.S. job mkt.
  • Asian FX consolidates recent sharp drops, because overnight FOMC minutes were quite dovish on Fed policy, says Gao Qi, FX strategist at Scotiabank
  • 10-year bonds yield from Japan to Australia hover near record lows; U.S. 10-year Treasury yield steady at 1.3615%
  • Aussie selling led by leveraged investors after S&P lowers the rating outlook, according to an Asia-based FX trader; pair’s decline was trimmed on bids from intraday accounts
    • S&P explains that decision to lower Australia’s outlook to negative, reflects view that without implementation of more forceful fiscal policy decisions, material govt budget deficits may persist for several years with little improvement
    • Analysts see limited impact on AUD as demand for yields and lack of clear outperformer in FX market may cushion impact; see Research Roundup
  • Yuan gains first time in six days after PBOC lifts fixing, and CFETS
    • PBOC extends reserve requirement on offshore banks trading FX forwards in China; decision aimed at raising cost of yuan selling and to curb excessive speculation on yuan depreciation through cross border arbitrage, Gao Qi of Scotiabank says
    • Yuan’s decline vs USD and trade-weighted basket “makes a mockery” of PBOC’s suggestion that its policy is to keep currency stable: CapEcon
    • CFETS said late yday that yuan will remain stable against its basket of currencies and there will continue to be 2-way moves based on mkt demand and supply
    • June FX reserves data due today; median est. in Bloomberg survey is $3.167t vs $3.192t in May
    • PREVIEW: China reserves may fall again as Brexit takes toll
  • Yen gains for third day
    • BOJ Governor Haruhiko Kuroda said Japan’s CPI is likely to be slightly negative for the time being
    • Prime Minister Abe’s adviser Fujii says a 20t yen stimulus package could bring about 2% inflation
    • Westpac recommends selling USD/JPY at 103.30, with stop- loss at 104.40, according to note today
  • Won leads gains among Asian currencies, halting a 3-day drop as Kospi index rises, following an overnight advance in U.S. stocks
    • Govt to hold meeting on to boost investment and trade, releases relevant policy measures at 12:30pm local time
    • Nomura cut CPI inflation forecast to 0.8% from 1.0% for 2016, and to 1.0% from 2.0% for 2017, well below the BOK’s 2% inflation target, according to note yesterday
  • Most southeast Asian currencies including SGD and THB gain
    • Natixis expects Monetary Authority of Singapore to recenter SGD NEER band lower at or before Oct. policy announcement, according to July 6 note
    • Bank of Thailand is going to cut benchmark rate by 25bps to 1.25% at Sept. 14 policy meeting to provide more support to growth, HSBC writes in client note received today
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Qi Gao (Bank of Nova Scotia Asia Ltd/Singapore)

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UUID: 7947283