Halister News

(Bloomberg) -- Recommends investors sell 2023 bonds, sees local 10-yr notes trading at 10% yield in next three months, according to e-mailed report by analysts including Min Dai.

• Expects long-end to underperform as foreign investors reduce duration risk
• Turkey has entered a period of “rising political risk again, at least for the next 6-8 months”
• Likelihood of cutting the O/N rate by 50bps in May has “decreased materially”; says 25bps or no cut more likely
• Sees USDTRY heading to 3.2 per dollar by year-end; another election cycle and risks around monetary policy and security remain “key headwinds for the currency”
• Central bank, finance ministry may turn more accommodative in case of early election or referendum. which means “risks to public finances and the inflation outlook are to the upside”

(Bloomberg) -- European credit markets may open with a weaker bias after RBA cuts inflation forecast, but trading may be subdued again after yesterday’s holiday and ahead of U.S. non-farm payrolls data, Bloomberg strategist Simon Ballard writes.

• Headlines and results from U.K. regional and London mayor elections likely to damp GBP credit market volumes; broad picture of results not expected until this evening at earliest
• Asian equities and ITraxx weaker with A$ lower and govt bonds bid as RBA sees CPI below mid-point of its target range for some time
  • Other key macro data points today: German April Construction PMI, Spain industrial output
• Risk Appetite model posts small rise in spread dispersion, reflecting investor caution, while volatility element remains anchored

• CDX IG closed -0.1bps at 84.43 in overnight session; iTraxx Asia Ex Japan IG is currently +1.1bps at 145.32

NEWS

• Corporate News
• ArcelorMittal Profit Drops 33% After Steel-Price Collapse
• Kraft Heinz Beats Earnings Estimates as Condiment Sales Grow
• InterContinental Hotels 1Q Revpar In Line With Estimates
• Smurfit Kappa 1Q Revenue, Ebitda In Line With Estimates
• Formosa Petrochemical April Sales Fall 22% Y/y to NT$42.7b

• Financial News
• Macquarie’s Record Profit Run May Be Ending as Challenges Mount
• Goldman Said to Extend Fixed-Income Job Cuts to 10% of Staff

• Credit Rating News
• Fitch Affirms ASB’s Covered Bonds at ’AAA’; NZD2.0bn Loans Added

• Other News
• Global Plunge in Yields Undercuts Fed Interest Rate Warnings
• Shadow Lending Crackdown Seen Forcing China Banks to Sell Bonds

ANALYST VIEWS

• We’re into uncharted waters, but it has left the corporate bond market -- in Europe -- to establish itself as a core, necessary income boosting asset class: creditmarketdaily.com

NEW ISSUES

• Travis Perkins GBP300m 9/2023 bonds at 4.5% yield
• 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) -- Japan-related factors such as prospects for sales-tax hike and fiscal spending may be a major focus for JGBs ahead of G-7 Summit later this month, says Nobuto Yamazaki, executive fund manager at DIAM, in an interview.

• “Pressure for consolidation is likely to strengthen as market players assess investor needs,” says Tokyo-based Yamazaki, highlighting 10-year JGB auction on May 10 and 30- year sale on May 12
• Says U.S. nonfarm payrolls due tonight are unlikely to have a huge impact on JGBs unless the data are extremely strong or weak; forecasts 10-year yield in range of -0.140% to -0.070% for coming week
• Yield on 10-year JGBs now down 1 bp at -0.120%
• NOTE: G-7 Summit is scheduled in Ise-Shima in western Japan on May 26-27

(Bloomberg) -- (Corrects the spelling of the name of the second analyst in the lead.) INR is typically one of the weakest performing currencies in May having weakened in 12 out of last 16 years, Khoon Goh and Rini Sen, strategists at ANZ, write in note today.

• Says unusual absence of auspicious wedding dates in May this year may not be sufficient to prevent INR weakness from repeating; typically weddings lead to rise in gold demand and associated spending
• INR’s close correlation with the equity market means it is vulnerable to signs of domestic slowdown and any reassessment of US Fed rate hikes
• With the currency on the rich side, INR’s diminishing positive reaction to rate cuts and slow reform progress also pose risks to the currency
• Maintains USD/INR forecast at 68.5 by end-2016
• USD/INR steady at 66.5625; pair has gained 0.3% so far this month

(Bloomberg) -- ArcelorMittal says 1Q revenue $13.4b vs $14b est., 1Q Ebitda $927m vs $924.5m est.

• 1Q adj. net loss $0.2b vs $0.4b in 4Q
• 1Q steel shipments rise 8.8% q/q, stable y/y
• 1Q iron ore shipments -2.2% y/y
• Net debt $17.3b vs $15.7b at year-end
• Expects FY Ebitda in excess of $4.5b (Bloomberg est. ~$4.8b)
• Impact of the improving steel spread environment is expected to be fully reflected in 2H results
• Expects to be FCF positive in 2016

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