HALISTER1: JPMorgan Increases Mid-Year 2016 TIPS Breakeven Forecasts

JPMorgan Increases Mid-Year 2016 TIPS Breakeven Forecasts

(Bloomberg) -- 5Y breakeven forecast is 165bp (was 140bp), 10Y breakeven 175bp (was 165bp), 30Y breakeven 190bp (was 185bp), JPMorgan strategist Kimberly Harano says in March 18 note recommending 5Y breakeven wideners.
  • Changes reflect downward revision to JPM’s U.S. corporate spread forecast for end-2016 (to 180bp from 225bp)
  • Last week’s Feb. CPI and FOMC meeting “were very supportive,” and while reception for 10Y TIPS reopening “was somewhat disappointing,” retail demand for TIPS as measured by 12-wk moving avg of flows into TIPS ETFs “remains elevated”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Kimberly Harano (Bear Stearns & Co Inc)

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UUID: 7947283

HALISTER: MORE: Marriott, Starwood Sign Amended Agreement at $79.53/Shr

MORE: Marriott, Starwood Sign Amended Agreement at $79.53/Shr

(Bloomberg) -- Starwood board determines revised terms from Marriott constitute “superior proposal” vs Anbang group offer.
  • HOT up 2.8% pre-mkt
  • Increased cash consideration to $21/shr; revised exchange ratio of 0.80 MAR/HOT shrs; targeted annual G&A synergies increased to $250m run-rate
    • Ex. timeshare business, transaction values HOT at ~$13.6b, consisting of $10b of MAR stock, based on the closing price of $73.16 on March 18, $3.6b cash, based on ~170m outstanding HOT shrs
    • HOT holders will own ~34% of combined co. stock post- deal
    • HOT holders due to receive separate consideration in Interval Leisure Group stock from spinoff of HOT timeshare business, subsequent merger with ILG; currently valued at $5.83/HOT shr (based on ILG March 18 close)
    • Amended agreement, plus ILG transaction, have ombined current value $85.36/shr of HOT
  • MAR, HOT special stockholder meetings to be held April 8; close planned for mid-2016
  • MAR sees deal roughly neutral to adj. EPS in 2017, 2018
  • Sees one-time transaction costs $100m-$130m over next 2 yrs
  • Break-up fee certain circumstances increased to $450m from $400m
  • Lazard, Citigroup advising HOT, Deutsche Bank advising MAR
  • Separately, MAR reiterates revpar, rooms growth views NSN O4DZ923MMTC1
  • Related:
    • March 18, MAR May Need $15/Shr of Cash to Match Anbang: Evercore ISI
    • March 18, JPMorgan Sees 40% Chance Marriott Ups Starwood Bid, 60% It Walks
  • Call 8:00am 866-966-5335
Link to Statement:Link
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
MAR US (Marriott International Inc/MD)
HOT US (Starwood Hotels & Resorts Worldwide Inc)
IILG US (Interval Leisure Group Inc)
1083236D CH (Anbang Insurance Group Co Ltd)

Topics
Key Comm. Real Estate News

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HALISTER: ECB Spurring Fixed Income Pickup, Credit Agricole’s Hocher Says

ECB Spurring Fixed Income Pickup, Credit Agricole’s Hocher Says

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
2539Z GR (European Central Bank)
4068781Z FP (Credit Agricole Groupe)
ACA FP (Credit Agricole SA)

People
Jean-Yves Hocher (Credit Agricole Private Bnkg)
Mario Draghi (European Central Bank)

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UUID: 7947283

HALISTER1: RATES: Front-End Short Remains Poor Risk-Reward, BofAML Says

RATES: Front-End Short Remains Poor Risk-Reward, BofAML Says

(Bloomberg) -- Following March 16 FOMC meeting, “we continue to believe that market pricing is not stretched relative to Fed expectations,” BofAML strategists Shyam Rajan and Dora Xia say in March 18 note.
  • While “easy to conclude that 2-5y yields have room to rise even if the Fed’s now ‘pessimistic’ dot projections are met,” that’s “a weak rationale to be short the front end”
  • Market will assign “at best a 50% probability” to each of the hikes represented by median dot over next two years
  • “Making 11-28bp on a 5y rate short when equities are at local highs, credit spreads are at tights, seems rather poor risk-reward”
  • BofAML’s other core theme, that real rates are heading lower, got “two additional kickers” last week, from 30Y TIPS auction allotment data showing increased demand from pension funds and foreign investors, and from Yellen’s “repeated emphasis on lower neutral real rates”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Dora Xia (Bank of America Corp)
Shyam Rajan (Bank of America Corp)

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UUID: 7947283