EU CREDIT DAILY: Market Losing Sheen; VW Slumps, BlackRock Lures
(Bloomberg) -- Spreads look set to close the week with a cautious tone in both primary and secondary segments with Asian risk weaker overnight amid ongoing global macro and Brexit uncertainty, Bloomberg strategist Simon Ballard writes.
- Primary market may be losing a little sheen given that the new Deutsche Bank T2 deal was unable to come tighter than IPT
- The ECB’s corporate-sector purchase plan should fuel renewed buoyancy for risk assets in coming months, notwithstanding the risk of heightened market volatility as we approach the U.K. EU referendum on June 23
- Consolidation in corporate spreads may have further to run near term
- Risk Appetite Model sees volatility element drop to 21.77%, while spread dispersion continues to edge higher
- CDX IG currently -0.2bps to 81.38 in overnight session; iTraxx Asia Ex Japan IG is currently +1.1bps at 144.41
NEWS
- Corporate News
- VW’s European Market Share Slumps to Five-Year Low on Scandal
- Rusal’s Profit Increases as Weakening Ruble Helps Cut Costs
- Coca-Cola HBC 1Q Net Sales Rev. Down 2.7%, Volume Up 0.1%
- Romania’s Romgaz 1Q Net Income Declines 13% on Lower Gas Demand
- AB Inbev, Ambev Agree to Exchange Some Businesses in Latam
- ERG 1Q RC Ebitda EU163m Rises 46% Y/y; Sees FY Ebitda ~EU440m
- Hitachi Reports Full-Year Group Earnings Results (IFRS)
- Sixt 1Q Sales Rise 16%; Pretax Gains 11%; Net Income Drops 16%
- Bouygues 1Q Rev. Matches Ests.; Confirms Full-Year Outlook
- Financial News
- Mizuho Sees Profit Dropping 11% as Negative Rates Erode Margins
- Handlowy 1Q Net 104.4m Zloty; Analyst Est. 109.5m Zloty
- Nedbank Finalizing Banco Unico Stake Purchase: Business Report
- Storebrand ASA: Capital Mkts Day 2016, updated fin’l targets
- Credit Rating News
- S&PGR Rates Japan Post Bank ’A+/A-1’; Outlook Negative
- China Coal, Steel Issuers’ Risks Rise on Reliance on CP: Fitch
- Other News
- BlackRock Lures $1 Billion to Bond ETFs in Japan on Minus Rates
- India Eases Limits on Foreign-Bank Stakes in Private Lenders
- Banks, Bond Buyers Applaud as EU Softens Trade Transparency
ANALYST VIEWS
- Credit markets are chugging along, showing moderate, albeit understandable weakness under a deluge of issuance: creditmarketdaily.com
- UniCredit Capital Target Looking a Bit Less Safe: Barclays
NEW ISSUES
- Bpifrance EU600m 0.75% 10/2021 Tap FRTR +19
- Deutsche Bank EU750m 10Y Tier 2 MS +400msg
- KfW EU1b 8Y Green Bond MS -24
- Schleswig-Holstein EU250m 10Y MS -4
- Suez EU500m 12Y MS +65
- TSKB $300m 5Y Reg S Green Bond MS +387.5
- Unite (USAF) II GBP125m 3.921% 6/2025 Tap UKT +145
- WL Bank EU250m 0.875% 1/2030 Covered Tap MS +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.
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