EU CREDIT DAILY: ECB Fillip; Daimler, Volvo Drop; Lloyds Cuts
(Bloomberg) -- The ECB has given a fillip to credit risk across quality curve, but details of the corporate-sector purchase plan show central bank may end up crowding out the market, Bloomberg strategist Simon Ballard writes.
- Spreads firm as market digests details; in terms of potential size of eligible pool, announced measures are toward upper end of expectations; still, questions remain:
- What will the treatment of IG/HY split rated issuers be?
- Where will ECB find liquidity to buy?
- What about the risk of further financial repression as the corporate buying plan distorts risk asset pricing?
- What is the moral justification for intervention when the corporate funding mechanism isn’t broken?
- Meanwhile, global macro continues to maintain degree of uncertainty in risk-market price performance
- ECB may fuel some volatility, but corporate purchase plan to keep Risk Appetite Model spread dispersion anchored
- CDX IG currently +1.2bps at 74.14 in overnight session; iTraxx Asia Ex Japan IG is currently -0.1bps at 137.26
NEWS
- Corporate News
- Daimler First-Quarter Profit Drops on E-Class Relaunch Costs
- Volvo First-Quarter Earnings Fall on North America Truck Market
- SSAB 1Q Loss Smaller Than Estimated; Expands Cost Cuts
- Financial News
- Banco Sabadell 1Q Net EU252M, Beating Estimates
- Barclays Uganda Full-Year Net UGX55.3b vs UGX41.3b as Loans Grow
- Swedbank Names Acting CEO Permanent Head After Wolf Was Ousted
- Lloyds Said to Mull Deeper Job Cuts to Combat Low Interest Rates
- Credit Suisse Said to Study Novel Bond Sale to Offload Bank Risk
- BNP Said to Hire David Ratliff, 26-Year Veteran of Citigroup
- Credit Rating News
- China Risks Disorderly Deleveraging If Support Seen Weak: Fitch
- China Developer With Debt Rated CCC+ Says Money Good for Payment
- Fitch Affirms Ageas Insurance Company Asia at ’A-’/Stable
- Moody’s Raises Argentine Financial Institutions’ Debt Ratings
- Other News
- Draghi May Prove a Short-Lived Boost to Company Bonds in Europe
- Wall Street Bonus Pay Restricted Under Regulators’ Proposal
- BOJ Officials Said to Eye Possible Negative Rate on Loans
ANALYST VIEWS
- We can look forward to a period of spreads crunching better in certain sectors, although our view remains that the whole of the credit market will benefit/participate in this trend, born from the manipulative hand of the ECB: creditmarketdaily.com
NEW ISSUES
- Loxam EU250m 7NC3 Senior Secured Notes 3.50%
- MOL EU750m 7Y 2.75%
- 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.
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
Tickers 2539Z GR (European Central Bank)
VOLVB SS (Volvo AB)
People David Ratliff (Citigroup Inc)
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