EU CREDIT DAILY: ECB Augurs Big Week; Aus. Banks, Mizuho, Apple
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By Simon Ballard (Bloomberg) -- All eyes will be on March 10 ECB meeting, and the prospect of interest rates going deeper into negative territory to battle stagflation. The decision will be hugely important for risk asset mkts, with the potential to make or break the recent tightening trend in corp credit spreads, Bloomberg strategist Simon Ballard writes.
- Macro concerns including China slowdown, Brexit, EU growth and U.S. rates continue to cloud risk appetite
- ECB easing should be a fillip for risk assets; any failure to deliver may see spreads punished
- However, deeper negative rates may intensify balance- sheet headwinds for financials; questions remain whether more stimulus will be anything more than just a short- term fix
- M&A may also fuel credit spread gyrations; tobacco sector in spotlight, amid speculation BAT is eying a full takeover of Reynolds
- Risk Appetite model retracing YTD spread dispersion, but vol still elevated
- CDX IG currently +0.6bps at 95.15 in overnight session; iTraxx Asia Ex Japan IG is currently -2.4bps at 149.41
NEWS
- Corporate News
- Irish Continental Sees Growth in Revenue, Earnings in 2016
- Synthos 2015 Net 426m Zloty; Analyst Est. 440.9m Zloty
- Financial News
- Rising Bad-Debt Charges Next Hassle for Australian Lenders
- Nedbank Issues Cautionary Until Old Mutual March 11 Update
- Mizuho Said to Form Alliance With Redburn on Europe Equities
- Metro Bank Conditional Dealings Begin Today on LSE
- Rating News
- Lower Indonesia Rates May Help Corporates, Squeeze Banks: Fitch
- Opening of China’s Interbank Bond Mkt Credit Positive: Moody’s
- Rtgs On NEC Corp. Affirmed At ’BBB’; Outlook Still Stable: S&P
- Other News
- Apple Software Chief Warns One Phone Break-in Can Wreak Havoc
- China Said to Plan Crackdown on Loans for Home Down-Payments
- Draghi Aims ECB’s Killer Blow in 11th Round Against Deflation
ANALYST VIEWS
- There is every reason for corporate bond market cash spreads to continue to tighten from here and through March; it’s a win-win, but for all the wrong reasons: creditmarketdaily.com
NEW ISSUES
- BNP Paribas EU750m 10/2026 Tier 2 MS +227
- Xylem EU500m 7Y MS +220
- Deutsche Pfandbriefbank Tapped PBBGR 1.5% 9/2019 by EU100m at 101.382
- 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.
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