Halister News

(Bloomberg) -- Spain to sell 0.25% 01/2019, 1.95% 04/2026, 5.75% 07/2032 for EU2b-3b at 10:30am CET. Analysts have mixed views on curve value, though expect smaller size of auction to provide support.

• Nomura (Pooja Kumra)
  • Size is relatively small; on micro fly, 3Y has cheapened 4bps-5bps in the past few sessions, mostly a result of 2s5s flattening move
  • 10Y has richened on the curve since Jan. launch; on the roll, offers pick-up of 7.8bps over the SPGB 10/2025,which still looks rich relative to recent range
  • Off-the-run SPGB 2032s has marginally cheapened on the curve since the supply announcement

• SocGen (Marc-Henri Thoumin)
  • Despite new ECB measures, political gridlock, aftermath of possible general elections on June 23 may cause more volatility
  • 3Y offers value vs other SPGBs, though has seen limited concession; short-dated bonds offer greater protection from worsening global risk sentiment, also acceptable carry
  • Limited value in 10Y; bond has underperformed 10/2025s by ~1bp in ASW since the announcement, though from rich levels
  • 2032 issue has seen limited concession, bond offers good pick-up vs 10Y sector, which may support the auction

• Mizuho (Antoine Bouvet)
  • Limited size gave SPGBs a boost when announced; 3Y looks cheap vs surrounding high coupon bonds, though recommend waiting for better entry point
  • 10Y trades around fair value on the curve; 8-9Y sector more attractive
  • Optimistic on the 07/2032 bond given strong performance on the curve, trades rich in repo, expect good demand for the issue

• BNP (Ioannis Sokos)
  • Spanish spreads vs Germany have compressed since March ECB, but by less than BTPs; think relatively wider SPGB/BTP spreads are justified, do not exclude further SPGB underperformance on the back of political uncertainty in the months ahead
  • 2020-22 bonds outperformed on SPGB curve, driving the 5/10s slope steeper, may see some 5s10s over coming
  • Overall expect good auction result, driven mostly by the low auction size vs usual EU4b-5b

(Bloomberg) -- Widening bias has returned to secondary euro corporate bond spreads after post-ECB exuberance faded but a dovish FOMC should buoy risk-asset sentiment this morning, Bloomberg strategist Simon Ballard writes.

• That FOMC left U.S. rates unchanged came as little surprise; but accompanying dovish language scaling back tightening expectations for this year should provide a fillip for near- term risk appetite
  • Focus in U.K. now turns to today’s BOE rate decision and any Asset Purchase Target update
• Early performance of Inbev deal, given the reported strength of order book, may be seen as a litmus test for true current depth of investor demand and perception toward degree of technical support to come from ECB’s CSPP
• Risk Appetite Model highlights risk to secondary mkt credit spreads from pressure of new issues
• CDX IG currently -3.4bps at 87.34 in overnight session; iTraxx Asia Ex Japan IG is currently -4.1bps at 133.40

NEWS

• Corporate News
• Lufthansa Profit Jumps 55% With Pricing to Hold Back 2016 Growth
• LafargeHolcim Profit Meets Estimates as 2016 Demand Seen Growing
• China Mobile 2015 Profit Misses Estimates, Shares Reverse Gain
• HeidelbergCement Boosts Dividend Amid Expected 2016 Growth
• Toyota’s China Supplier Sees Rising Profit on Hybrid Sales
• Telefonica Deutschland to Accelerate Job Cuts: Rheinische Post
• Bouygues, Partners Win EU675 Million Calais Port Contract

• Financial News
• VTB Group 2015 Net Income 10.7b Rubles vs 4.1b Rubles Y/y
• Wells Fargo Hires Ex-JPMorgan Asia Banker as Global Banking Head
• UBS to Continue to Invest in China, APAC Wealth Head Koh Says
• Credit Suisse Boosts Wealth Managers Based in Singapore by 50%

• Rating News
• Moody’s concludes reviews of six South and Southeast Asian national oil companies
• Fitch Affirms SKI and SKGC at ’BBB’; Outlook Revised to Stable

• Other News
• Fed Softens Rate-Rise Urgency as Risks Abroad Cloud Outlook
• Pimco to Goldman Seek Vindication as Inflation Bets Start to Pay

ANALYST VIEWS

• We might need a renewed push for the corporate bond market to tighten more aggressively after the huge spread recovery witnessed since last Thursday; will possibly not emerge until details of the corporate bond buying program are announced: creditmarketdaily.com

NEW ISSUES

• AB Inbev EU13.25b 6-Part Deal
• AXA Bank Europe SCF EU750m 7Y Covered Bonds MS +18
• Barclays Plc (HoldCo) EU1.5b 5Y MS +187
• BRFkredit EU500m 5Y Covered Bonds MS +20
• Commerzbank EU1b 10Y Tier 2 MS +340
• CA Home Loan SFH EU3.25b 7Y, 15Y Covered Bonds
• Colombia EU1.35b 10Y 3.875%
• Faurecia EU700m Senior 7.2NC3.2 Notes 3.625%
• Kommunekredit EU1b 7Y MS +2
• 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) -- France to sell 3.5% 04/2020, 0.25% 11/2020, 2.25% 10/2022 for EU6b-7b; 0.10% I/L 03/2021 for EU1.5b-2b at 10:50am CET; analysts see limited concession, though expect latest ECB measures to continue to support French paper in this sector.

• Nomura (Pooja Kumra)
  • Likely to be final tap of 11/2020s, new 5Y OAT scheduled for April 21; small cheapening on micro flies since the ECB announcement; belly of the curve to remain key beneficiary of new LTRO, expect further spread compression to bunds
  • Recent outperformance of OLOs may be owing to Belgium coupon flow; this may fade; OATs may outperform as market starts to focus on France coupons at the end of April
  • Both 04/2020s and 10/2022s have seen small cheapening on micro flies over past 2-weeks

• Mizuho (Antoine Bouvet)
  • 04/2020 issue is too cheap by ~6.5bps on the butterfly to 10/2017 and 04/2022, expect demand on that basis
  • This will be final tap of 11/2020, this issue should richen on the roll going forward as its predecessors

• SocGen (Marc-Henri Thoumin)
  • New ECB policy measures have helped feed further spread compression in recent days, reviving demand for longer duration in core, soft-core
  • Limited concession in the 2020 issues; OAT 11/2020 has underperformed 04/2020 slightly since early Feb., prefer owning the slightly longer issue
  • 10/2022 offers value vs shorter maturities; risk-on mode in EGBs should support further flattening in near term

(Bloomberg) -- Co. says it will consider internal candidates for role.

• Says Witty indicated to the board his intention to retire from the co. in early 2017

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