Halister News

--ANGELA CULLEN

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- Any attempts by elements of the credit market, including Deutsche Bank’s CDS, to trade meaningfully tighter are quickly being faded; corporate credit spreads may attempt to recover some losses soon, but sentiment remains fragile at best especially in subordinated financial risk, Bloomberg strategist Simon Ballard writes.

• Cash bond quality curves in EUR and U.S. have steepened toward historic highs in recent days
  • U.S. IG/HY cash bond spread currently ~630bps, highest since our data began 01/2012; EUR IG/HY spread currently 476bps (reached 492bps on Jan. 20)
  • No evidence of investor buying into weakness, rather mkt may continue to favor reducing risk exposure into any strength/price recovery
• Risk Appetite Model sees modest deterioration in line with global selloff
• CDX IG currently -2.4bps at 121.11 in overnight session; iTraxx Asia Ex Japan IG is currently +0.7bps at 163.28

NEWS

• Corporate News
• Heineken, Carlsberg Forecast Higher Earnings on U.S., Asia
• Hermes Says 2016 Sales Growth May Fall Short of Mid-Term Target
• SoftBank Earnings Drop as Son Struggles to Turn Around Sprint
• Maersk Profit Plunges as Oil, Container Divisions Both Suffer
• Tullow Reports Wider-Than-Expected Loss After Taking Writedowns

• Financial News
• Deutsche Bank Said in Early Stages of Mulling Bond Buyback
• Standard Chartered Leads Credit Swap Surge for U.K. Banks
• Goldman Sachs Abandons Five of Six ‘Top Trade’ Calls for 2016
• Allianz GI CIO Says Deutsche May Need More Capital Raising

• Rating News
• Chesapeake Credit Rating Cut by S&P on ‘Unsustainable’ Debt
• WPX Energy Cut to BB- From BB by S&P, May Be Cut Further
• S&P Takes Actions on U.S. Banks With Large Energy Exposures

• Other News
• Trump and Sanders Thump Rivals in New Hampshire
• ECB’s Villeroy Sees Downside Risks to European Recovery
• Dollar Bulls Await Yellen as Citigroup Says Pessimism May Reign

ANALYST VIEWS

• The temptation to get involved is clear given some of the price action, but the lesson is to wait: prices likely have further to drop, and remember that the decision whether to make coupon payments resides in extremis with the regulator: creditmarketdaily.com

NEW ISSUES

• No syndicated primary issuance in Europe on Tuesday, as well as being the 3rd consecutive day without an IG deal in the U.S.
• 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.