Halister News

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

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DOWNGRADES

• Ashok Leyland Nissan Vehicles
  • Long-term bank facilities cut to BBB- from A at Care
  • LT bank facilities of Nissan Ashok Leyland Powertrain also cut to BBB- from A at Care
  • Cites loss making operations

• NTS Dairy
  • LT loan facilities cut to D from B+ at Crisil
  • Cites delay in payment of term loan installment

• Oyster Steel
  • LT loan facilities cut to B+ from BB- at Crisil
  • Expects liquidity to deteriorate over the medium term

• Parikh Investment
  • LT loan facilities cut to D from B+ at Crisil
  • Cites delay in servicing debt

• Shraddha Energy
  • LT bank facilities cut to BB+ from BBB- at Care
  • Cites deterioration in financial risk profile

• Solutrean Building
  • LT bank facilities cut to BB- from BB at Care
  • Cites low level of collections

• Swati Energy
  • LT loan facilities cut to BB- from BB+ at Crisil
  • Cites decline in scale of operations

• Tega Industries
  • LT loan facilities cut to A- from A at Crisil
  • Expects group’s business risk profile to remain constrained over the medium term

UPGRADES

• Bunge India
  • LT loan facilities raised to A+ from A at Crisil
  • Expects business risk profile to improve over the medium term from continued focus on foods business

• Solitaire Energies
  • LT bank facilities raised to BBB+ from BBB at Care
  • Cites stable generation levels

• Sapphire Industrial
  • LT bank facilities raised to BBB- from BB+ at Care
  • Cites improvement in collection cycle

• Uttam Sugar Mills
  • LT bank facilities raised to C from D at Care
  • Cites improved liquidity profile

(Bloomberg) -- A full FX hedge of foreign bonds by GPIF would make ownership much less attractive for the fund, RBS strategists including Marco Brancolini write in client note.

• Among core European bonds, only long-end gilts and OATs would offer a pickup to JGBs
• Continue to like France 5s15s flatteners as Japanese investors start pushing down the curve; OATs now yield more than USTs once adjusted for cross-currency basis
• Japanese investors may also start investing in periphery

• NOTE: Japan’s GPIF to Embrace Currency Hedging, Nikkei Says

(Bloomberg) -- Credit-market sentiment remains susceptible to macro headlines and commodity-price gyrations. But while equities, iTraxx indexes may show consequent volatility, the relative outperformance of cash corporate bonds highlights the fundamental value and buy-and-hold nature of the latter asset class, Bloomberg strategist Simon Ballard writes.

• Many investors increasingly uncomfortable with compressed level of yields, spreads; encourages increased risk exposure
  • Primary corporate credit mkt may be increasingly aware of need to avoid negative yields to ensure success; Unilever pricing yday
• EU’s Guersent says ECB corporate-bond buying will boost issuance; could take sheen off demand/supply dynamics
• Corporate and sector event risk a clear reminder of underlying fragility of macroeconomic backdrop: Brexit polemic, U.S. rates outlook, British Home Stores administration
  • Default risk highlighted by 1MDB default on 5.75% 2022 bond due to dispute over coupon payment
• Risk Appetite Model remains solidly underpinned for now at least
• CDX IG currently +0.7bps at 74.63 in overnight session; iTraxx Asia Ex Japan IG is currently +0.2bps at 140.90

NEWS

• Corporate News
• BP Profit Falls 80% as Oil Prices Drop; Result Beats Estimates
• Bayer Profit Beats Estimates as Newest Drugs Buoy Demand
• BAT First-Quarter Sales Beat Estimates on Market Share Gains
• Cobham Warns on FY Underlying Trading Profit, Plans Rights Issue
• Whitbread FY Revenue In Line; Confident of Progress This Year
• B/E Aerospace Boosts 2016 Outlook as 1Q EPS, Rev. Beat Estimates
• Countrywide Says Encouraged by Strong 1Q, Maintains FY Outlook

• Financial News
• Van Lanschot 1Q Profit Drops 52%; AUM Rise on Net Inflow
• Swedbank Profit Stagnated Last Quarter as New CEO Takes Helm
• St James’s Place FUM Rises, Net FUM Inflow Increases
• Deutsche Bank Board Members Will Seek Thoma Resignation: FAZ

• Credit Rating News
• S&P Assigns ’A-3’ Rtg To Kraft Heinz Prop. CP Prog

• Other News
• MUFG Sees Bosses Orders Behind Tripling of Japan Long-Bond Sales
• Fed to Keep Options Open for June Rate Hike: Decision-Day Guide

ANALYST VIEWS

• Unilever...new issue premiums (were) higher at the front end versus the existing curve, because anything (much) less and they would potentially be offering a bond with a negative yield. No one wants that, literally: creditmarketdaily.com

NEW ISSUES

• JPMorgan Chase EU1.5b 10.5Y Senior MS +88
• Unilever EU1.5b 4Y, 8Y, 12Y Bonds
• ABB Finance EU700m 7Y MS +35
• CFF EU1b 9/2024 Covered MS +9
• Rhineland-Pfalz EU150m 0.125% 3/2023 Tap MS -9
• 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/JPY is vulnerable to a pull back below 110.00 if BOJ fails to live up to market expectations for some sort of additional QQE this week, Bloomberg strategist David Finnerty writes.

• 23 of 41 economists in a Bloomberg survey forecast BOJ will further ease policy at its meeting on April 27-28; central bank will also release the latest quarterly outlook report
• Comparison between 1-mo. USD/JPY implied volatility option smile today with a similar period prior to BOJ’s meeting in Jan. suggests investors are a lot more prepared for central bank easing now than in the first month of 2016
• Gov. Kuroda told WSJ earlier this month that the yen’s appreciation in recent months could undermine BOJ’s efforts to raise inflation rate to 2% and lead toward additional easing measures
  • Chart illustrates how decline in Japanese imported inflation due to stronger yen, weighed on CPI
• USD/JPY rallied last week following a Bloomberg report that BOJ officials were eyeing possible negative rate on loans
  • If BOJ does not ease in some form, investors may look to reverse this rally
• 1Q Tankan survey and various 1Q economic data don’t signal an economy strong enough to generate the demand-pull inflation needed to counter yen strength
  • Markets may question BOJ’s commitment to achieve CPI goal if easing is not undertaken, particularly as it expects March ex-fresh food and energy CPI, the new preferred measure of inflation, to rise by only 1.0% y/y from 1.1% y/y in Feb. extending its downward trend from Dec.
• Note that Fed FOMC decision on April 27 may adopt a more hawkish tone than at March meeting, and this could provide some degree of support to USD/JPY even if BOJ does not act

• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- JGBs such as super-long debt are likely to bought on dips, regardless of whether BOJ eases monetary policy at this week’s meeting, says Yusuke Ikawa, salesperson at UBS Knowledge Network, in an interview.

• Even if BOJ stands pat, investors’ buying of JGBs will probably persist as future easing can’t be ruled out: Tokyo- based Ikawa; says, under such a scenario, pressure for yen appreciation and stock weakness could increase, which may spur calls for additional QE by BOJ
• Super-long sector is leading today’s JGB rally on back of Nikkei’s interview with GPIF’s President Takahashi and BOJ’s debt purchases, says Ikawa; notes Takahashi’s comments that 20- and 30-year yields are still positive and that any increase in fund’s investments would be made on daily basis
• 5-year yield falls 1.5 bps to -0.235%, 10-year yield drops 3 bps to -0.105%, 20-year yield slips 6 bps to 0.305% and 30- year yield slides 7.5 bps to 0.335%

(Bloomberg) -- USD/KRW non-deliverable forwards accounted for 40.7% of total volume today, according to trades reported to DTCC; USD/TWD second-most active at 19.1%, USD/MYR third-most active at 13.2%.

• Notional amounts traded include:
  • Total $500m+ of USD/KRW at 1,154.65; matures Nov. 2
• Total volume was $9.1b as of 2:35pm HKT; global total yesterday was $55.5b, with USD/BRL accounting for 29.3%