Halister News

(Bloomberg) -- UBS lowers U.K. 10Y yield forecasts following recent downward revisions to global growth projections and changes to BOE MPC policy outlook, strategist John Wraith writes in a client note.

• Yr-end est. cut by 20bps to 1.80%; end-2017 forecast also lowered by 20bps to 2.05%
• Less positive on U.K. economic outlook, expect inflation to be lower for longer; still see MPC rate hike late in 2016
  • Later rate increase will delay move higher in longer yields; expect 10Y gilt yields to rise “relatively slowly” compared to previous cycles
  • Remain more optimistic on timing vs market pricing; short-dated interest rate markets imply ~50% chance of rate cut over next year, do not fully price an increase until late 2019
• NOTE: UBS Pushes Back BOE Bank Rate Increase to Nov. 2016

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- Analysis of CDS and cash spreads gives a bifurcated image of corporate credit space; derivatives edging tighter suggest the market may be primed for a recovery after the recent widening, but the inability of cash indexes to gain similar positive momentum would hint at the extent of investor caution, Bloomberg strategist Simon Ballard writes.

• CoCos remain one of key asset classes under pressure; no sign of meaningful buying of CoCo bonds even after losing more than 20% of value YTD
  • Investor rhetoric suggests any buying interest will remain highly selective in coming weeks; generic spread selloff may reduce perceived need to take subordination risk, favor senior parts of capital structure, IG over HY
• Rebound in Asian equities this morning as China returns from holiday should create generic fillip for EUR credit
• Risk Appetite Model settling down, but may struggle to move back into ‘risk on’ mode

• CDX IG currently -0.5bps at 121.56 in the overnight session; iTraxx Asia Ex Japan IG is currently -6.2bps at 169.90

NEWS

• Corporate News
• Reckitt 4Q LFL Sales Growth, 2015 Adj. Oper. Profit Beats Ests.
• Toyota-Led Profit Gains at Risk as Carmakers Face Strong Yen
• Japan Utilities Seen Pushing for Atomic Restarts as Reform Looms

• Financial News
• HSBC Keeps London Headquarters in Victory for U.K. Over Asia
• Bank of Baroda Surges Amid Expectation for Profit After Big Loss
• Bank of East Asia Rejects Hedge Fund’s Call to Explore Sale
• Softbank Won’t Issue Debt to Finance Buyback

• Rating News
• S&P Says Hong Kong’s Property Market Will Get Tougher In 2016
• Japan Major Banks’ Earnings May Fall 8% on Negative Rates: S&P

• Other News
• Banks Cutting Most-Experienced Bond Traders in Fixed-Income Cull
• RBA’s Stevens Puts on Poker Face as Traders Bet He’ll Cut Rates
• Yuan Rises Most Since 2005 as PBOC Voices Support, Raises Fixing

ANALYST VIEWS

• “I wouldn’t be buying the dip just yet; after some of the moves we’ve seen these past few weeks, capitulation has become very topical. Capitulation in any asset class is a disorderly exit. Cash becomes king”: creditmarketdaily.com

NEW ISSUES

• Schleswig-Holstein EU300m 3Y FRN 3ME +1
• LBBW EU500m 6Y Covered Bond MS -3
• Rentenbank EU400m 0.375% 1/2024 Tap MS -15
• Klepierre EU500m 10Y MS +130
• University of Leeds GBP250m 12/2050 Bonds UKT +100
• EIB EU250m 1.25% 11/2026 Tap
• EIB EU300m 2.625% 3/2018 Tap MS -20
• 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 a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- Freeport-McMoRan in pact to sell stake to Sumitomo Metal Mining for $1b in cash, deal “important initial step” to accelerate debt reduction, restore balance sheet.

• JV currently owned 85% by FCX, 15% by Sumitomo Metal Mining Arizona
  • After deal completion, JV will be 72% owned by FCX, 15% by SMMA, 13% by unit fully owned by SMM
• Deal expected to close in mid-2016
• Proceeds will be used to repay borrowings under bank term loan, revolving credit facility

Link to statement: NSN O2KRC03S3GUC

Economic Release Details: {INFINFY Index ECOD} --PRADEEP KURUP