HALISTER: Europe’s Phone Industry Chief Makes Case for More Consolidation

Europe’s Phone Industry Chief Makes Case for More Consolidation

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
DTE GR (Deutsche Telekom AG)
ORA FP (Orange SA)
1 HK (CK Hutchison Holdings Ltd)

People
Mats Granryd (Gsma Ltd)
Margrethe Vestager (European Commission)

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UUID: 7947283

HALISTER1: Pimco Sees ’Brexit’ Probability Up to 40%; Months of Uncertainty

Pimco Sees ’Brexit’ Probability Up to 40%; Months of Uncertainty

(Bloomberg) -- Irrespective of the twists and turns in debate over U.K.’s planned referendum on EU membership, uncertainty over the result is likely to weigh on U.K. markets for a good few months yet, Mike Amey, Pimco portfolio manager says in press release.
  • Assign up to 40% probability of “Brexit” even as Pimco assumes the U.K. will vote to remain in the EU
  • If the U.K. were to vote to leave, nature of separation would be key to market response
    • A confrontational separation will likely to lead to a more long-lasting response, with pressure on GBP and large U.K-listed companies with significant European activities
    • Would likely be bullish for gilts as any hope of an interest rate rise would be pushed even further back
    • Any gilt market weakness would likely be in longer-dated yields, where higher risk premium may come into the real yield
  • NOTE: Gilt market response to referendum splits investors while Citigroup sees different reactions at different times
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Michael Amey (Pacific Investment Management Co LLC)

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UUID: 7947283

HALISTER: Wall Street Gloom Seen as ‘Big Disconnect’ With Profit Outlook

Wall Street Gloom Seen as ‘Big Disconnect’ With Profit Outlook

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
HON US (Honeywell International Inc)
VMC US (Vulcan Materials Co)
KO US (Coca-Cola Co/The)

People
J Hill (Vulcan Materials Co)
Jonathan Golub (RBC Capital Markets LLC)
Mark Luschini (Janney Capital Management LLC)
Philip Orlando (Federated Investors Inc)
Thomas Szlosek (Honeywell International Inc)

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UUID: 7947283

HALISTER1: China Hopes Spain to Deal With ICBC Probe Fairly: CCTV

China Hopes Spain to Deal With ICBC Probe Fairly: CCTV

(Bloomberg) -- China hopes Spain can deal with ICBC money-laundering investigation according to the law, CCTV reports, citing Foreign Ministry spokesman Hong Lei at a regular briefing.
  • China hopes Spain will protect legal rights of Chinese institutions and individuals
  • NOTE: Spanish Police Arrest Five in ICBC Money-Laundering Probe Link
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
601398 CH (Industrial & Commercial Bank of China Ltd)

People
Hong Lei (People's Republic of China)

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UUID: 7947283

HALISTER1: AUCTION PREVIEW: Cross-Market Demand May Support France Supply

AUCTION PREVIEW: Cross-Market Demand May Support France Supply

(Bloomberg) -- France to sell 0% 02/2019s, 0.25% 11/2020s for EU6.5b-EU7.5b at 10:50am CET, then sell I/L bonds for EU0.5b-EU1b at 11:50am CET. Analysts suggest the reduced size of auction may support the sale with demand expected vs Belgium, Germany.
  • Mizuho (Antoine Bouvet)
    • Size is ~EU1b less than average of past four short-end auctions and lower average maturity should help garner decent demand
    • Lack of competition from short-dated supply out of Belgium, Germany is also supportive
  • Barclays (Henry Skeoch)
    • Expect auction to be taken down well by the market given that broad risk sentiment feels somewhat better this week and expectations of ECB action soon
  • Commerzbank (Benjamin Schroeder)
    • Shorter bond trades close to ECB’s deposit facility rate at -0.3%, close to being disqualified for PSPP purchases; may limit appetite for this bond
    • Elevated levels vs Bunds look attractive, particularly at the front end given expectations for further depo rate cuts from ECB
  • SocGen (Marc-Henri Thoumin)
    • 3Y has seen some pre-auction cheapening on the curve, giving up ~3bps vs 02/2018s since Jan. 26; 11/2020 bond has been stable vs peers
    • 3Y-4Y sector has put in limited concession vs longer dates; at the margin, widening vs OLOs may support
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Antoine Bouvet (Mizuho Financial Group Inc)
Benjamin Schroeder (Commerzbank AG)
Henry Skeoch (Barclays PLC)
Marc-Henri Thoumin (Societe Generale SA)

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UUID: 7947283

HALISTER1: AUCTION PREVIEW: SPGBs to Benefit From Improving Sentiment, ECB

AUCTION PREVIEW: SPGBs to Benefit From Improving Sentiment, ECB

(Bloomberg) -- Spain to sell 0.25% 01/2019, 1.15% 07/2020, 1.95% 04/2026 for EU3b-4b at 10:30am CET. Analysts note lack of curve concession, political risks but see support from improving risk sentiment, ECB policy outlook and attractive carry.
  • SocGen (Marc-Henri Thoumin)
    • SPGB 2019, 2020 have seen limited concession ahead of the auction; longs in front-end provide good carry and roll; also protection if risk sentiment proves unstable, should help demand
    • 10Y issue looks rich in the sector, offers good pick-up vs the 2022 sector, though flattening looks uncertain given the unstable risk sentiment, political risks
  • BNP (Ioannis Sokos)
    • Size of auction is relatively small; SPGBs have underperformed vs BTPs lately, spreads vs Germany remain volatile; more clarity around next ECB meeting may benefit peripherals
    • Don’t recommend BTP/SPGB compression trades, concerns over political situation in Spain, expect BTPs to outperform in ECB-related risk-on rally
  • Commerzbank (Benjamin Schroeder)
    • Political risks remain, valuations vs BTPs don’t look particularly attractive with the SPGB/BTP spread closer to middle of recent range
    • General risk environment is starting to brighten again; spreads vs core, semi-core look stretched
  • Barclays (Henry Skeoch)
    • Spain has posted slight underperformance vs Germany, Italy recently; 3Y bond has cheapened slightly in relative value ahead of the supply
    • Improvements in broad risk sentiment, expectations for ECB, should support the auction
  • Mizuho (Antoine Bouvet)
    • 3Y Spain looks cheap vs peers, would look to buy on further cheapening; 5Y issue is one of the cheapest in the sector, specialness on repo suggests auction to benefit from short covering demand
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Marc-Henri Thoumin (Societe Generale SA)
Antoine Bouvet (Mizuho Financial Group Inc)
Benjamin Schroeder (Commerzbank AG)
Henry Skeoch (Barclays PLC)
Ioannis Sokos (BNP Paribas SA)

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UUID: 7947283

HALISTER1: EU CREDIT DAILY: Investors Nibble; Vodafone, Apple, Rabo, Nestle

EU CREDIT DAILY: Investors Nibble; Vodafone, Apple, Rabo, Nestle

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- Improved risk sentiment overnight suggests investors are beginning to view cheaper valuations as a buying opportunity; however, we are still some way off from being in full “risk-on” mode, Bloomberg strategist Simon Ballard writes.
  • iTraxx synthetic indexes pushing tighter as oil rises, stocks extend recent recovery; macro concerns appear allayed; cash bonds lagging, but still net tighter
    • Composition of EUR primary-market shows supply largely dominated by high-quality financial and SSA issuers; non-financial corporate issuers seem to need a “story” and attractive pricing, which alludes to persistent defensive bias among investors; nervousness of corporates to test risk appetite
    • Infamous DB 6% CoCo bond, at center of last week’s selloff, trading just above 81 from 70.2 a week ago, but still 10-20 pts off levels seen prior to February weakness
  • Risk Appetite Model highlights recent recovery in spreads from “oversold” levels, but volatility gaining momentum
  • CDX IG currently +0.5bp at 116.85 in overnight session; iTraxx Asia Ex Japan IG is currently -3.8bps at 161.11
NEWS
  • Corporate News
  • Air France-KLM Posts First Profit Since 2010, Still Seeking Cuts
  • Volvo Cars 2015 Profit Triples as XC90 SUV Exceeds Targets
  • BAE Systems 2015 Profit In Line With Est., Sees Higher 2016 EPS
  • Nestle Sales Rise at Slowest Pace in Six Years on Asia
  • Vodafone to Raise About 2.9 Billion Pounds Via Convertible Bonds
  • Apple Gains Silicon Valley’s Backing in Fight Against Government
  • Financial News
  • Oil, Gas Pressuring Singapore Banks’ Asset Quality: Moody’s
  • Rabobank Profit Rises 20% in 2015 as Loan Charges Fall
  • Mizuho Bank to Cut Yen Deposit, Raise Dollar Deposit Rates
  • Overnight Rating News
  • Saudi Rating Gets S&P Jolt as Four Oil-Nation Credits Are Cut
  • Brazil’s Rating Cut Further Into Junk Territory by S&P
  • Fitch Affirms Union Insurance at IFS ’A-’; Outlook Stable
  • Other News
  • Nomura Sees Yen Falling More Than 10% on BOJ Negative Rates
  • Treasuries Lose Out to Negative-Yield Debt in Germany and Japan
ANALYST VIEWS
  • Increased prevalence of negative rates globally has given rise to questions as to whether they are helping or hurting: CS
  • We all want to chase yield, but the commodity and CoCo debacles have been an annoyance and a frustration. And a reality check. For investors, it’s now about preserving capital and generating income: creditmarketdaily.com
NEW ISSUES
  • Rentenbank EU250m 0.625% 2/2030 Tap MS -6
  • HSH Nordbank EU500m 5Y Covered Bonds MS +18
  • Rentenbank GBP100m 1.375% 12/2020 Tap UKT +40
  • EIB GBP300m 2.5% 10/2022 Tap UKT +40
  • Sampo EU500m 5/2019 Bonds MS +125
  • Santander International Debt SAU EU1b 5Y MS +135
  • SEB EU1b Long 5Y MS +73
  • 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: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
NESN VX (Nestle SA)
VOD LN (Vodafone Group PLC)

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UUID: 7947283