HALISTER: Europe Banks May Face $27 Billion Energy-Loan Losses, BofA Says

Europe Banks May Face $27 Billion Energy-Loan Losses, BofA Says

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
INGA NA (ING Groep NV)
BNP FP (BNP Paribas SA)
BAC US (Bank of America Corp)

People
Alastair Ryan (Merrill Lynch International)
Michael Helsby (Merrill Lynch International)

To de-activate this alert, click here
To modify this alert, click here

UUID: 7947283

HALISTER1: PREVIEW: UST 3Y Auction May Draw Lowest Yield Since March 2014

PREVIEW: UST 3Y Auction May Draw Lowest Yield Since March 2014

(Bloomberg) -- Current 3Y yield lower by 1.4bp at 0.817% before 1pm ET auction, 14th straight at $24b; WI 3Y bid at about 0.840%, below 3Y auction stops since 0.802% in March 2014.
  • Treasury quarterly refunding announcement on Feb. 3 left 3Y auction size unchanged and included cuts of $1b to 5Y, 7Y, 10Y and 30Y that were not widely expected
  • Most recent 3Y auction on Jan. 12 drew 1.174%, 1.1bp below WI yield at deadline, according to Stone & McCarthy; indirect award was highest since Nov. 2009 record while primary dealer award was lowest since Nov. 2009
  • Current 3Y yield touched 1.379% on Dec. 30, highest since April 2011; it retreated to 0.785% today, lowest since Oct. 2, amid declines for European and U.S. equities
  • 18 of past 19 3Y auctions stopped through by as much as 1.1bp, according to Stone & McCarthy; year-ago auction stopped through by 1bp
  • 6-auction averages:
    • Bid-to-cover: 3.10 (low 2.82, high 3.34)
    • Dealer award: 37.8% (low 27.8%, high 44.1%)
    • Direct award: 11.7% (low 8%, high 18.6%)
    • Indirect award: 50.4% (low 40.8%, high 62.9%)
  • Maturing 3Y has $32b outstanding
  • Primary dealers’ position in 2Y-3Y sector in week ended Jan. 27 was net short $3.41b vs $6.19b avg net short over past year
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

To de-activate this alert, click here

UUID: 7947283

HALISTER1: U.S. ECO PREVIEW: JOLTS, Wholesale Trade in 5 Minutes

U.S. ECO PREVIEW: JOLTS, Wholesale Trade in 5 Minutes

(Bloomberg) -- Job openings seen at 5.413m in Dec. (forecast range 5.33m to 5.465m)
  • Nov. job openings totaled 5.431m
  • Wholesale inventories seen falling 0.2% m/m in Dec. (range -0.4% to +0.1%)
  • Nov. wholesale inventories declined 0.3% m/m; fell 0.1% in Oct.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

To de-activate this alert, click here

UUID: 7947283

HALISTER: The Case for Splitting Apart Taco Bell and Yum! Brands: Gadfly

The Case for Splitting Apart Taco Bell and Yum! Brands: Gadfly

Alert: HALISTER
Source: BG (Bloomberg Gadfly)

Tickers
YUM US (Yum! Brands Inc)
0170077D US (Corvex Management LP)
IEP US (Icahn Enterprises LP)
MCD US (McDonald's Corp)

People
Carl Icahn (Icahn Enterprises Holdings LP)
Daniel Loeb (Third Point LLC)
Greg Creed (Yum! Brands Inc)
Keith Meister (Corvex Management LP)
Mark Kalinowski (Nomura Holdings Inc)

Topics
Shelly Banjo Column

To de-activate this alert, click here
To modify this alert, click here

UUID: 7947283

HALISTER1: RATES: 3Y Should ‘Be Absorbed With Relative Ease,’ JPM Says

RATES: 3Y Should ‘Be Absorbed With Relative Ease,’ JPM Says

(Bloomberg) -- Although sector appears “modestly rich” along the curve, recent 3Y auctions have been “well-received,” and any continued FTQ bid for USTs “should allow” $24b auction at 1pm “to be absorbed with relative ease,” JPMorgan strategists led by Jay Barry say in Feb. 8 note.
  • Since last auction on Jan. 12, 3Y yields have fallen by 36bp, and sector appears ~4bp rich vs. wings after adjusting for level of rates and slope of the curve
  • 3Y roll opened at +2bp and tightened to +1.625bp, “roughly in line with the erosion of carry”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Jay Barry (JPMorgan Chase & Co)

To de-activate this alert, click here

UUID: 7947283

HALISTER: European Banks Face Energy Sector Loan Losses of $27b: BofAML

European Banks Face Energy Sector Loan Losses of $27b: BofAML

(Bloomberg) -- European banks exposure to potential loan losses from energy sector is seen at $27b, or about 6% of their pretax profits over 3 years, BofAML says in note.
  • That’s less of a hit than implied by numerous banks’ current share price
  • Energy exposure is manageable for most banks; buy BNP, ING, StanChart
  • Banking system capitalization fine even if estimate of $27b potential energy loan losses is correct
  • Est. is based on peak default figures/trough recovery figures
  • Also based on European banks’ 38% share of global energy sector loans rated non-investment grade at inception
  • Those loans seen at $371b, implies $141b is European banks share
  • Notes total energy sector debt outstanding is $2.5t of which 60% is in bond market, $1t in bank loans
  • BofAML estimates European banks 2016-2018 pretax profit at $484b
RELATED
  • Money Markets Calm Belies Risks Seen in European Banks’ Credit
  • Bernstein Sees $70b of High Yield Energy Default by 2019
  • Deutsche Says Barclays, DNB Among Banks Most Exposed to Oil
  • JPMorgan Says French Banks Dividend Ests Too High as Oil Weighs
  • SocGen Rating, EPS Estimates Cut on Revenue Outlook: Alphavalue
  • European Banks’ YTD Decline May Herald Worse to Come: AlphaValue
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
INGA NA (ING Groep NV)
BNP FP (BNP Paribas SA)
STAN LN (Standard Chartered PLC)
EBS AV (Erste Group Bank AG)
RBS LN (Royal Bank of Scotland Group PLC)

To de-activate this alert, click here

UUID: 7947283