Halister News

(Bloomberg) -- Most strategists are bearish, with Barclays and Deutsche Bank recommending short 10y Bund into ECB as well as front-end steepeners, while Citigroup and BNP also expect Bund yields to head higher in the short term.

• Bucking the trend is Morgan Stanley, who expects continued QE to boost bund ASW as scarcity bites and support 5y point on the curve as the interest-rate expectation component is also anchored
• ECB market consensus on QE sits firmly at EU30b/month for 9 months, though strategists views are more mixed

Citigroup (strategists including Harvinder Sian)

• Consensus for QE extension of EU30b/month for 9 months, which would be neutral for market
• Turn bearish on Bunds into ECB meeting, house view is for EU150b-200b of further buying but no set monthly amount, see potential for a knee-jerk 10-15bps sell- off in 10y Bunds
  • Any overshoot of this sell-off would be a buying opportunity as the ECB front-loads and buys longer into year-end is expected to support; medium-term, the trend is likely to be a bearish grind toward 0.75% as QE impacts net supply

Deutsche Bank (strategist including Francis Yared)

• Expectations for QE extension have converged toward EUR25b-30b/month for 9 months
• Front-end rate pricing looks “extreme,” with the first full 25bps rate hike priced by early 2020; recommend going tactically short 1y1y Eonia into this week’s ECB meeting at -26.5bps, targeting -18bp
• Stay short 10Y Bund initiated at the start of the month given scope for the ECB to surprise hawkishly relative to market pricing; potential for an announcement of an end date to QE, together with risks skewed toward a lower pace of purchases

Morgan Stanley (strategists including Elaine Lin)

• Continue to recommend being long 5y Germany on 2s5s10s butterfly, as well as being long 10y Bunds on asset swap into the ECB meeting
• Expect ECB to announce QE at EU30b/month for at least 9 months, which the market is already pricing; therefore expect the carry and roll-down theme to continue for a while longer

Barclays (strategists including Cagdas Aksu)

• Given the broadly dovish expectations for the ECB meeting, see good risk-reward in bearish trades
  • Initiate tactical short in 10y Bunds outright and maintain reds/greens EONIA steepeners and short 10y Netherlands ASW versus EONIA trades

BNP (strategists including Eric Oynoyan)

• Expect ECB to cut QE to EU30b/month for 6 months; hold short Bobl into ECB as declining QE should erase premium seen in Bunds, with 5y point most vulnerable; near term expect 10y Bund yield to rise to high-50bps

To contact the reporter on this story: Stephen Spratt in Hong Kong at sspratt3@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Keith Jenkins

(Bloomberg) -- Here’s a roundup of Indian co. debt-rating changes.

• To get this story sent to your inbox real-time, run NI INRATINGS, click on Display & Edit, then Set Alert Delivery

UPGRADES

• Adani Green Energy
  • Long-term bank facilities raised to BBB+(SO) from BBB at Care
  • Cites moderate track record of operations of power generation by its wind mill at Lahori in state of Madhya Pradesh
• Arvind PD
  • LT bank facilities raised to BBB+ from BBB at Care
  • Cites growth in scale of operations, improved profitability
• Hanumant Construction
  • LT bank facilities raised to B- from C at Crisil
  • Cites timely servicing of term debt obligations
• Kalamandir Jewellers
  • LT bank facilities raised to BBB from BBB- at Crisil
  • Expects co. to sustain its improved profitability and capital structure over the medium term
• National Engineering
  • LT bank facilities raised to AA from AA- at Care
  • Cites improvement in overall financial risk profile
• Navayuga Bengalooru Tollway
  • LT bank facilities raised to A-(SO) from BBB+(SO) at Care
  • Cites robust, diversified order book position
• Ostro Jaisalmer
  • Term loan raised to BBB+ from BBB at Care
  • Cites project’s satisfactory operational track record
• T. C. Motors
  • LT bank facilities raised to BB from BB- at Crisil
  • Cites increase in revenue, margins

DOWNGRADE

• Shirpur Power
  • Rupee term loan cut to D from BB+ at India Ratings
  • Cites defaults on debt obligation

(Bloomberg) -- Airtac International Group slides as much as 5.1% Monday, biggest intraday decline since April 10, after co.’s 3Q net income fell from the previous quarter.

• Stock down 4.5% at NT$451 as of 11:45am in Taipei
  • Hit record high of NT$477 Friday
• Airtac 3Q net income NT$895.7m vs NT$978.5m in 2Q; revenue NT$3.85b vs NT$3.60b
• Credit Suisse raises PT to NT$490 from NT$485, but cuts rating to neutral from outperform due to limited upside from new PT, analyst Jerry Su writes in Oct. 23 note
  • Co.’s sales may fall 9% q/q in 4Q due to seasonality, given 8-day October holiday
• Airtac’s gross margin declined in 3Q due to higher cost of raw materials like aluminum and wage hikes, though offset by greater scale and efficiency: Su
• Expects Tainan site top break even in 2017, while co. management forecasts small loss; site will turn profitable in 2018
• “There is limited positive catalyst in the near term and would suggest investors to look for a better entry point in 1Q18,” Su says
• NOTE: Airtac shares have risen 80% this year

To contact the reporters on this story: Will Davies in Hong Kong at wdavies13@bloomberg.net; Amanda Wang in Shanghai at twang234@bloomberg.net To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net Will Davies, Ryan Lovdahl

(Bloomberg) -- The JGB market will focus on whether the relationship between the Bank of Japan and the government remains status quo or strengthens further after Sunday’s election, says Satoshi Shimamura, head of rates and markets for the investment strategy department at MassMutual Life Insurance Co. in Tokyo.

• BOJ has influence over JGB market via its bond buying operations so views on this policy by govt is key in gauging market impact
  • BOJ Governor Kuroda will likely be summoned to prime minister’s office for consultations before extraordinary Diet session takes hold
• After almost two years of negative rate policy, it’s time focus is put on banks’ role as intermediaries as their average debt duration is about three years
• As FSA scrutinizes banks’ risk management and business operations, questions may arise as to whether govt should continue with this negative rate policy
• BOJ could pay more attention to the negative aspects of the minus rate policy
• Question about negative rate policy may lead to argument for tweaking that policy or steepening the yield curve to boost source of income for banks
• When attention for that issue rises, the 20-year sector is most likely to feel the risk, leaving to a correction to expensiveness in 20-year zone

To contact the reporter on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui

(Bloomberg) -- Hua Nan Commercial Bank’s New York branch wasn’t involved in any money laundering, parent Hua Nan Financial Holdings says in statement to Taiwan stock exchange on Oct. 22.

• Lender will make improvements on any feedback from regulator’s routine audit
• NOTE: The New York State Department of Financial Services is reviewing any failings by the bank on money- laundering controls, Taipei-based Apple Daily reported Oct. 22

To contact the reporter on this story: Adela Lin in Taipei at alin95@bloomberg.net