Halister News

(Bloomberg) -- German May Ifo business climate est. 106.8 vs prev 106.6.

• German May Ifo current assessment est. 113.3 vs prev 113.2
• German May Ifo expectations est. 100.8 vs prev 100.4

(Bloomberg) -- Germany to Sell 2.5% 07/2044 for EU1b at 11:30am CET. Analysts optimistic on the sale, given demand in the market for long-dated core bonds, recent improvement in auction metrics.

• Mizuho (Antoine Bouvet)
  • Optimistic on sale; heavy SSA supply in long-end highlights healthy demand for the sector; upcoming index extensions are also supportive factors
  • Bond has cheapened in RV vs 08/2046 since the turn of the year

• Commerzbank (Michael Leister)
  • Supply should be well digested; ultra-long sector remains in demand; 30Y bund-ASW remains at widest level Oct.
  • 30y bund auctions have seen steady, pronounced improvement in auction metrics, real bid/covers of past 30Y auctions average 1.1x, tails 5.7c
  • RV not compelling, bond trades at richest levels since September 2014 vs 08/2046

• SocGen (Marc-Henri Thoumin)
  • Recommend 15s30s bund flatteners; curve has steepened ~10bps since early April, 15Y point looks rich relative to curve
  • Expect post auction richening as supply pressure in long-end to fade

• Danske Bank (Anders Moller Lumholtz)
  • Demand for long bunds at latest auctions has improved, expect the same to apply to this tap

(Bloomberg) -- The Greece debt agreement in principle forged overnight should help buoy EUR market sentiment this morning, even as potential triggers for volatility such as the U.K. EU membership referendum and June FOMC meeting still loom large, Bloomberg strategist Simon Ballard writes.

• Credit markets currently assume a bullish base case for risk, with demand/supply dynamics underpinned
  • Strong economic data may vindicate a Fed rate increase; recent polls suggest U.K. may vote to stay in the EU; ECB will start EUR IG corporate bond buying from end June
• Bayer/Monsanto deal still firmly in M&A spotlight; Monsanto rejected $62b offer, seeks higher price
  • Underscores need for robust bottom-up credit research as integral part of the investment process
• Risk Appetite model see spreads edge tighter on renewed bullish sentiment

• CDX IG closed -1.5bps at 79.64 in overnight session; iTraxx Asia Ex Japan IG currently -2.4bps at 142.83

NEWS

• Corporate News
• Marks & Spencer Profit Beats Estimates as CEO Unveils New Plan
• Wesfarmers May Record More Than A$2b Impairments on Target, Coal
• Pennon’s FY Earnings Beat Estimates, Revenue Misses
• EVN 1H Group Net Rises 15% y/y; 2015-16 Group Net Seen Stable
• Mitsubishi Motors Fuel Scandal Charge Cuts Net by 19%
• NewRiver Retail Revenue, Profit Jump; Sees Scope For More Growth
• Telekom Malaysia 1Q Net Income 322.4m Ringgit Vs 128.9m Ringgit
• McCarthy & Stone Reports Improved Credit Facility Terms
• Babcock FY Underlying Revenue, EPS In Line With Estimates

• Financial News
• Nomura Cuts Executive Pay to 3-Year Low as Daiwa Increases
• Danske Bank Says Extreme Negative Rates Changing How We Think
• Deutsche Bank Trading Woes Exposed in Slide Down Currency League
• Aussie Banks Benefit From Perceived Govt Support: RBA Study
• Wells Fargo Considering What to Do With Extra Cash, Stumpf Says

• Credit Rating News
• Fitch Downgrades BAIC Group to ’BBB+’; Outlook Stable
• Hertz Global Rtgs Unafctd By Prpsd HERC Spinoff: S&PGR
• Moody’s Upgrades Honduras to B2 Citing Improved Fiscal Profile

• Other News
• Greece to Get $11.5b Payout as Debt Relief Weighed
• Fed Hawks Spur Japan Bond Buying as Swaps Turn World Upside Down
• Draghi in QE Quandary After Draining Bond Market by $800 Billion

ANALYST VIEWS

• Total EUR non-financial corp IG supply has now passed EU40b this month for only the fourth time in the history of the European corp bond mkt; record for any month is EU48.7b in Jan. 2009: creditmarketdaily.com

NEW ISSUES

• Air Products EU350m 5Y MS +43
• ANZ Bank New Zealand EU600m 5Y MS +65
• Dexia Credit Local EU2b 12/2019 MS +13
• EIB EU3b 4/2032 EARN MS +5
• Kommunekredit $1b 5Y MS +36
• NIBC Bank EU500m 10Y Covered MS +17
• REN Finance EU550m 7Y MS +158
• SCOR EU500m 32NC12 Subordinated Notes MS +290
• U.K. GBP3.5b 0.125% 2046 I/L Gilt Tap UKTi +1
• 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.

(Bloomberg) -- USD/KRW non-deliverable forwards account for 33.8% of total volume today, according to trades reported to DTCC; USD/TWD second-most active at 21.5%, USD/INR third at 15.3%.

• Notional amounts traded include:
  • Total $209m of USD/KRW at 1,189.85; matures Sept. 21
• Total volume was $12.6b as of 2:21pm HKT; global total yesterday was $72.2b, with USD/BRL accounting for 30.2%