Halister News

(Bloomberg) -- Here’s a roundup of Indian co. debt-rating changes.

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DOWNGRADE

• Kumar Sinew Developers
  • NCD worth INR1.79b cut to D from B+ at Brickwork
  • Cites instances of delays in servicing interest

UPGRADES

• Aakash Healthcare
  • Long-term bank facilities raised to BB+ from BB at Care
  • Cites completion of hospital project, refinancing of debt
• Amanta Healthcare
  • LT bank facilities raised to BBB from BBB- at Care
  • Cites ramp up in production, sales volume
• Dollar Industries
  • LT bank facilities raised to A from A- at Care
  • Cites improvement in financial performance, fund infusion by promoters
• KNR Muzaffarpur Barauni Tollway
  • Bank loans raised to BBB- from BB+ at India Ratings
  • Cites support from sponsor in meeting cost overruns, repayment of debt obligations and premium payable to NHAI

(Bloomberg) -- Local-currency Asian debt have room to extend their positive performance due to subdued price pressures and strong capital inflows, according to Invesco Hong Kong Ltd. AllianceBernstein Holding agrees, even as it acknowledged that investors are already very long on EM debt.

• Invesco is bullish on India’s local-currency government bonds as their real interest rates are “very attractive,” says Ken Hu, chief investment officer for Asia-Pacific fixed income in HK
  • RBI may pause in easing as cyclical forces could temporarily push up inflation rates slightly in the near term
  • In the medium to longer term, inflation is likely to remain on a downward trend as India’s strong economic reform momentum will boost productivity growth and depress price pressures
• EM Asian bonds have “become a crowded trade” but the rally still has room to run, says Anthony Chan, an Asian sovereign strategist at AllianceBernstein Holding in Hong Kong
  • Favors local-currency bonds of China, India, Indonesia, South Korea and Sri Lanka
  • Remains cautious on local- currency Malaysian and Philippine debt “despite their relatively attractive yield level as fundamental factors are unlikely to change soon to support an entry strategy”

To contact the reporters on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net; Kartik Goyal in Mumbai at kgoyal@bloomberg.net To contact the editors responsible for this story: Nicholas Reynolds at nreynolds2@bloomberg.net Patricia Lui

(Bloomberg) -- RBI to hold underwriting auctions for Friday’s INR150b govt bond sale; Sebi cautious of masala bond inflows on rupee appreciation.

• Sebi pushing mutual funds to cut costs, merge plans: Mahalingam
• Global funds add to Thailand, Indian Debt, cut Korean bonds
• BNP recommends sell on GCX bonds on earnings, asset-sale concern
• HDFC Bank’s corporate banking head is said to join Citigroup
• INR bonds seeking clues from central bank actions: Trust Capital
• Sensex declines as North Korea missile threat persists
• Traders most bullish on India since 2015 even as ETF sees exits
• Eicher Motors is said set to make $1.8B bid for Ducati: ET
• JM Financial ARC offers to buy out loans to Gujarat NRE: Mint
• Coal India’s large state customers are said to dispute pricing
• Treasuries sold off in afternoon session after reports of President Trump siding with Democrats to agree on a three-month debt-limit extension, while T-Bill curve steepened in response, from October maturities out to December tenors
  • 10Y yield -1bp to 2.09% as of 7:18am in Mumbai
• S&P 500 futures -0.1% to 2,461; cash closed +0.3% at 2,465.54

BONDS

• PRICED: Nabard INR15b tap of Sept. 2020
• CLOSED: HDFC, M&M Financial, Tata Capital
• India Bond Pipeline
• India Ratings

INDIA MARKETS

• Yield on India’s 6.79% May 2027 bond +2bps at 6.53%; benchmark 10Y YTD range 6.37%-6.99%
• Yield on 5Y AAA INR corporate notes little changed at 7.27%; YTD range 7.14%-7.81%
• JPMorgan India USD bond index -2bps to 4.12%; YTD range 4.1%-4.58%
• INR little changed at 64.1050/USD; 1-mo. USD/INR NDF 64.32%; 3-mo. USD/INR NDF 64.67
• 1Y INR swap rate at 6.11%; 5Y MIFOR 6.0750%; call money rate 5.75%
• CNX Nifty Index futures +0.3% to 9,977 as of 9:49am in Singapore; cash -0.4% to 9,916.20; BSE Sensex -0.5% to 31,661.97

To contact the reporter on this story: Anurag Joshi in Mumbai at ajoshi53@bloomberg.net To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net Chan Tien Hin

(Bloomberg) -- A decline in short-dated USD/JPY basis swaps has made it more enticing for dollar-holding investors to buy Japanese debt, says SBI Securities chief bond strategist Eiji Dohke.

• U.S. debt ceiling uncertainty also discouraged investors from holding short-dated U.S. securities as they divert their funds into Japanese notes as an alternative
• The three-month extension on U.S. debt ceiling is likely to reduce some demand for Japanese securities
• NOTE: USD/JPY one-year basis swap dropped to -54.75bps on Aug. 30, lowest in eight months, from -44.25bps on July 31
  • Non-residents’ purchases of Japanese bonds climbed to a net $12.5b last week, the third-highest level on record, according to finance ministry data released Thursday

To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui

Economic Release Details: {BZSTSETA Index ECOD} --MATTHEW MALINOWSKI

(Bloomberg) -- The timing of the new debt-ceiling deadline will depend on estimating borrowing needs for 1Q, “which is always a dangerous exercise since Treasury pays out the lion’s share of tax refunds” in January and February, Jefferies economists Ward McCarthy and Thomas Simons say in note.

• Drop-dead date could come as early as February if tax refund outlays are “relatively high” and Treasury needs to issue a lot of debt to fund them
• Deadline could be as late as end-2Q or beginning of 3Q if Treasury is able to get through refund season and make it to April 15 tax receipts 
• Determining the debt ceiling deadline will depend on how Congress writes the legislation; standard operating procedure during the past few years has been to suspend the ceiling for a defined period of time
• Assuming that agreement centers on a suspension through Dec. 15, Treasury will be able to replenish the G-Fund and others, which “reloads the extraordinary measures” for when the limit is hit again in mid-December; Treasury will ramp up bill issuance, and it will have to have the same cash on hand in December as it did upon the passage of the bill
  • “No matter how many bills are issued in September, October and November, Treasury will have to make potentially massive paydowns”

To contact the reporter on this story: Alexandra Harris in New York at aharris48@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Greg Chang

(Bloomberg) -- Fed Vice Chairman Stanley Fischer’s decision to step down effective mid-October will solidify President Trump’s control of the central bank’s leadership composition and make the Fed policy path in 2018 less certain, analysts wrote; risks of “policy discontinuity” have gone up, Evercore Vice Chairman Krishna Guha wrote in note.  

• USD accelerated declines after news that Fischer is resigning next month; Bloomberg Dollar Spot Index reached lowest since Aug. 29 before rebounding on plans for debt limit extension
• See MORE on Fischer’s resignation  
• Evercore (Guha)
  • Fischer’s resignation accelerates timeline by which Trump can reshape Fed leadership and increases policy uncertainty into 2018; uncertainty is “two-sided” and “may skew dovish rather than hawkish” for now, given Trump’s preference for low rates and a weak USD
  • Departure will “rob” next Fed chair of a “hugely respected and experienced” No. 2, and probably raises the influence of NY Fed’s Dudley and Fed Governor Powell as “figures of continuity” on FOMC; however, move shouldn’t change near-term policy dynamic on FOMC
  • While FOMC dots should drift lower across September and December, “a quite different set of dots may emerge” further ahead
• FTN (Chris Low)
  • Fischer’s resignation is “likely to wake traders to how effectively President Trump can transform the Federal Reserve”
  • By February, Trump will have the option to fill five of seven seats on the Fed board in Washington
  • Of the remaining governors, Lael Brainard is “a new thinker” and believes central bank must guard against tightening too quickly or risk permanently low inflation; she approaches policy much like Minneapolis Fed’s Neel Kashkari, “but with less snark and more intellectual heft”
• JP Morgan (Michael Feroli)
  • Fischer’s earlier-than-expected exit “only adds to the uncertainty” regarding Fed leadership in coming months
  • “At the margin, his absence may lower slightly the odds of a December hike”; however, data will be much more important
  • While resigning officials often won’t submit a dot at their last meeting, “there is no hard and fast rule”
• Keefe, Bruyette & Woods (Brian Gardner, Michael Michaud)  
  • Fischer’s announcement may slightly increase odds that Yellen is renominated to a second term; “stability and continuity will be Mr. Trump’s best friends” and renominating her “would be the most logical move” to further those goals 
  • Expect Trump to nominate “mainstream candidates who will be slow to raise interest rates”; he will “own” the Fed once he fills all five open seats on Fed board 
• Cowen & Co. (Jaret Seiberg)  
  • Fischer’s departure ensures Trump “can quickly gain control over the central bank” and gain a voting majority on the Fed board; this should help efforts to ease Dodd-Frank
  • Five of seven Fed board members could end up owing their jobs to Trump
  • Resignation of Fischer is “broadly positive” for large and regional banks
  • MORE

To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Greg Chang

--DEREK WALLBANK