Halister News

(Bloomberg) -- Italy to sell 0.1% 04/2019 for EU1.5b-EU2b, 0.95% 03/2023 for EU2.5b-EU3b, as well as 2.7% 03/2047 and 4.75% 09/2044 for a combined EU1.5b-2b at 11am CET.

• Analysts see value in owning shorter issues versus Spain; preference for 7Y BTP given value in sector and in RV

• JPMorgan (Gianluca Salford)
  • 2Y-4Y sector expensive on BTP curve, though 3Y benchmark trades with ~1bp discount, broadly fair value; cross market, Italy over Spain in 2Y-3Y sector as Spain trades through Italy
  • 7Y-9Y sector remains broadly cheap on BTP curve, 7Y benchmark has cheapened relative to surrounding bonds since first issued, offers benchmark discount of ~3bps, upper end of 12-mo. range
  • 09/2044 bonds looks around fair value, 03/2047 appears cheap

• Mizuho (Antoine Bouvet)
  • Auction is more duration than market was expecting; peripheral spreads should come under pressure this week from supply
  • Most optimistic about 03/2023; bond looks attractive in RV, especially against high coupon 05/2023

• UniCredit (Alessandro Giongo)
  • 3Y looks moderately cheap vs neighbors in Z-spread, trades ~4bps cheaper vs BTP 03/2019
  • 03/2034 looks cheap vs peers, trades 6.5bps cheaper than SPGBs
  • 03/2047 looks attractive in Z-spread vs BTP 09/2044

(Bloomberg) -- USD/KRW non-deliverable forwards account for 44.5% of total volume today, according to trades reported to DTCC; USD/CNY second-most active at 14.4%, USD/MYR third at 14.1%.

• Notional amounts traded include:
  • $250m+ of USD/KRW at 1,175.20; matures Dec. 15
• Total volume was $6.2b as of 2:41pm HKT; global total on June 10 was $48.6b, with USD/KRW accounting for 26.8%

(Bloomberg) -- Perceived weakness in global growth and credit market focus on Wednesday’s FOMC rate decision could damp investor activity and trading volumes early this week. With the U.K. EU referendum due next week, a cautious tone is likely to encompass global credit markets in coming days, Bloomberg strategist Simon Ballard writes.

• Asian equities in the red overnight as May Chinese fixed- asset investment data disappointed
  • Risk appetite may also be undermined by Florida mass shooting over the weekend amid concern over geopolitical risk
  • Brexit fears intensify and may fuel further underperformance of GBP corp risk vs EUR corp ahead of June 23 vote
• Risk Appetite Model registers modest weakness ahead of FOMC, EU referendum
• CDX IG closed -0.4bps at 77.43 in Friday session; iTraxx Asia Ex Japan IG currently +2.2bps at 143.73

NEWS

• Corporate News
• Japan’s Second-Biggest Bond Fund Doesn’t See Value in Yen Debt
• IMF Urges China to Tackle ‘High’ Corporate Debt Immediately
• Alexander Forbes FY Profit Rises to 874m Rand vs 360m Rand

• Financial News
• Morgan Stanley Clashes With Goldman on Bonds as Market Surges
• Japan Top Equity Strategist Sakagami Said to Quit SMBC Nikko
• Brexit Sends Danish 30-Year Mortgage Costs Below U.S. Tsys

• Credit Rating News
• Rising Risks in Oil & Gas Manageable for Singapore Banks: Fitch
• Moody’s Says Air NZ’s Stake Sale Is Credit Positive for Virgin
• S&PGR Affirms ’BB/B’ Ratings On HSBC Bank Brasil, Otlk Neg

• Other News
• Most Expensive Bond Mkt in History Has Come Unhinged. Or Not.
• German Government Bonds in ‘Bubble Territory,’ Allianz CIO Says
• China H-Share Rally Unravels as Stocks Sink Most Since Feb
• Trans-Atlantic Swaps Rift Spurs Concern of Damage to U.S. Market
• Trading Floors Go Quiet Across Asia as Equity Desks Face the Axe

ANALYST VIEWS

• Because we can’t see the end, and are afraid to bet against it as that will impact performance, we trade into it. We add risk. May as well keep going, we’re all in it together: creditmarketdaily.com

NEW ISSUES

• BNZ Intl Funding EU750m 5Y Covered MS +18
• ContourGlobal EU550m 5NC2 Snr Sec Notes 5.125%
• Otto EU250m 7Y 2.625%, MS +245.8
• Titan Cement EU300m 5NCL Notes 3.5%
• 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.
• NOTE: EU CREDIT DAILY won’t be published June 14-16; regular coverage will resume Friday, June 17.

(Bloomberg) -- Eric Wong, a Hong Kong-based portfolio manager at Fidelity International, likes bonds from China’s e-commerce companies as they have strong credit metrics and are generating a lot of cash.

• “Obviously a risk for these names is sometimes headline or regulatory risk”: Wong
• NOTE: Alibaba said on May 25 that it is being investigated by the U.S. Securities and Exchange Commission over its accounting practices. NSN O7RHL66TTDS7
• Wong said that the credit metrics of China online technology companies are so strong that even though most of their revenues are in yuan, a depreciation in the yuan doesn’t affect them that much
• “Theoretically, if the renminbi depreciates it will worsen their ability to support those dollar bond payments, realistically it’s not that big a deal”: Wong
• NOTE: Alibaba’s 2.5 percent bonds due 2019 have risen 0.3 cent on the dollar to 100.7 cents since May 25. Its 3.6 percent bonds due 2024 have increased 0.5 cent to 100.9 cents
• NOTE: Chinese internet companies Baidu and Tencent also have U.S. dollar bonds outstanding.

(Bloomberg) -- Pound slides, yen rallies while Nikkei index slumps and JGBs extend record low yields. Risk aversion is spreading amid heavy event risks over next 2 weeks that culminates with U.K. referendum on EU membership, which is still too close to call.

• SNB seen intervening more aggressively on Brexit, according to Bloomberg survey
• GBP/USD -0.51% to 1.4185 vs 1.4159-1.4271 range
  • Sold across the board by leveraged and macro funds; liquidity shrinking and deal sizes above GBP50m already becoming problematic, says trader
  • Investors intending to reduce U.K. related risks should do so this week, as liquidity is likely to be limited next week, Citigroup writes in note to clients
  • 20-cent range seen with U.K. EU vote, Bloomberg survey
  • Brexit outcome too close to call, undecideds seen as key
  • U.K. poll shows 54% support ‘Norway’ Brexit
• USD/JPY falls up to 1% to 105.95 session low
  • BOJ seen to act soon; 55% forecast more easing on July 29
  • Nikkei 225 drops as much as 3.1%; JGB 10-year yield down 1 bp to -0.16%; 5- and 20-yr yields also reach record lows
  • Brexit news impact yen more than Kuroda’s remarks: analysis
• AUD/USD +0.08% to 0.7379 vs 0.7359-0.7393 range
  • Subdued activity amid local market holiday
• BBDXY +0.01% to 1,183.66
• 10-yr Treasury yield falling for fifth session, drops 2 bps to 1.623%
• NZD/USD -0.23% to 0.7039 vs 0.7032-0.7063 range
  • Economists raise forecast for 2016-17 growth to 2.7%
  • 10-yr N.Z. yield also falls to record low of 2.50%
• EUR/USD little change in tight range of 1.1232-1.1263
  • Options expiring today include 1.1200 strikes for EUR1.5b
• WTI and Brent crude futures falling; gold, copper both rising

(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

DOWNGRADES

• Alliance Fibres
  • Long-term rating cut to BB from BBB- at Crisil
  • Cites deterioration in liquidity due to sharp decline in scale of operations and stretched working capital cycle
• Mandhana Industries
  • LT facilities and NCDs cut to BBB+ from A at CARE
  • Cites stretched working capital cycle due to elongation in receivables
• Tree House Education & Accessories
  • LT fund limits cut to BBB from A at CARE
  • Cites weak financial performance of co. in Jan.-March qtr

UPGRADES

• 4th Apple Developers
  • LT rating raised to B+ from B at Crisil
  • Cites improvement in liquidity supported by absence of term debt obligations, near completion of project
• JSW Steel Salav
  • LT bank facilities raised to A+ (SO) from AA- (SO) at CARE
  • Cites credit enhancement via letter of comfort from parent
• Unique Foods
  • LT rating raised to BB+ from BB at Crisil
  • Cites improvement in group’s business risk profile because of growth in income and cash accruals