HALISTER1: BBVA Says Take Profit on 10y USD Argentine Bonds on Low Spreads

BBVA Says Take Profit on 10y USD Argentine Bonds on Low Spreads

(Bloomberg) -- There’s still structural demand for Argentine assets, but volatility has increased and reflects higher uncertainty, BBVA analyst Alvaro Vivanco writes in note.
  • Risks include higher U.S. rates, concerns about potential further supply hitting the market, and cumbersome fiscal consolidation with amid constrained political maneuvering
  • “We remain positive of the overall direction of Argentine spreads, as our global scenario is broadly constructive for anchored LatAm assets. However, we adopt a much more tactical stance given likely more uncertainties down the road and less compelling spreads”
  • Recommends buying 10y bonds again at better levels
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Alvaro Vivanco (BBVA Securities Inc)

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HALISTER1: North Korean Leader’s Half-brother Killed in Malaysia in Possible Poison Attack, Police Say

North Korean Leader’s Half-brother Killed in Malaysia in Possible Poison Attack, Police Say

Alert: HALISTER1
Source: WPT (Washington Post)

People
Kim Jong-Un (Democratic People's Republic of Korea)
Kim Jong-Nam ((NKR)Natl Defense Commission)
Mao Zedong (People's Republic of China)

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UUID: 7947283

HALISTER1: Soft Calls, MFNs Deserve Scrutiny as Rates Rise, Moody’s Says

Soft Calls, MFNs Deserve Scrutiny as Rates Rise, Moody’s Says

(Bloomberg) -- Borrowers and investors should look carefully at yield protection clauses in loan agreements in a rising rate environment, Moody’s researchers led by Derek Gluckman wrote in a note.
  • Importance of soft calls and MFNs, which are designed to protect investors when borrowing costs fall, “seems counterintuitive” given expectations Fed will raise rates three times in 2017
    • Fed’s December rate hike drove investors to floating rate instruments which sparked lower borrowing costs and wave of refinancings
  • Repricing protections will continue to benefit investors, especially longer-term protections
    • In 2016, 66% of loans had 6-month soft call clauses and 31% had 12-month; 2015 was the last time any loan had soft call protections of more than 24 months
    • 94% of loans in 2016 had MFN protections, which are meant to preserve loan values in secondary trading; 80% of loans granted protection for the life of the credit facility and 14% had sunset provisions that expired after 12 or 18 months
  • Sunset provisions, which allow protections to expire even as loans remain outstanding, “will have a more pronounced negative impact on investors going forward”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Derek Gluckman (Moody's Corp)

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HALISTER1: Former Rio Governor Charged With 184 Counts of Money Laudering

Former Rio Governor Charged With 184 Counts of Money Laudering

(Bloomberg) -- (Machine translation provided by Google and reviewed by Bloomberg editors.)
  • Federal prosecutors in Rio de Janeiro accused Sergio Cabral of 184 crimes of money laundering, according to a statement on the Rio de Janeiro Federal Prosecutors’ website.
  • Cabral’s lawyer did not immediately respond to requests for comments made by Bloomberg
  • According to the complaint, dollar dealers received cash from 10 other people accused in the same complaint from the crimes of corruption and later distributed it through payments of expenses in favor of the members of the criminal group
  • Two donors who became collaborators provided a cash control spreadsheet indicating payments of 39.8m reais from Aug. 1, 2014 to June 10, 2015
  • Complaint says Cabral was “in charge of the criminal organization”
  • NOTE from Nov. 17: Rio Ex-Governor Jailed Over Alleged Graft in World Cup Arena NSN OGSYUMSYF01V
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
PETR4 BZ (Petroleo Brasileiro SA)

People
Sergio Cabral (State of Rio De Janeiro)

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HALISTER1: TS Energy Italy S.p.A. - DBRS Rating Report

TS Energy Italy S.p.A. - DBRS Rating Report

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

People
Energy Resources LLC (Energy Resources LLC)
Giuseppe Fresta (DBRS Inc)
Radi Annab (DBRS Inc)

Topics
Credit Analysis Research
Credit Research
Fixed Income Research
Investment Research

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UUID: 7947283

HALISTER1: Deutsche Bank Says Reduce Peru Credit on Risks From Scandal

Deutsche Bank Says Reduce Peru Credit on Risks From Scandal

(Bloomberg) -- The Odebrecht corruption scandal that’s entangled Peru’s ex-president could damage the perception of the government and lower economic growth due to delays in several major projects, Deutsche Bank strategists including Guilherme Marone and Sebastian Brown write in note.
  • Bank recommends reducing Peru credit to marketweight on lower risk, reward
  • It favors Soberanos 26s and 31s bonds on lower FX volatility, improved external credit conditions and fairly light positioning
  • Copper prices need to correct before the the bank said it will resume trades in EMFX crosses that include long PEN leg
  • NOTE: A prosecutor alleged last week that former President Alejandro Toledo received $20m in payments from the Brazilian construction firm Odebrecht in exchange for awarding it a highway contract; Toledo has denied any wrongdoing
  • NOTE: Peru Judge Orders Former President Toledo’s Arrest in Graft Case
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Guilherme Marone (Deutsche Bank AG)
Sebastian Brown (Deutsche Bank AG)
Alejandro Toledo Manrique (Republic of Peru)

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HALISTER1: Positioning Likely to Dominate H7/M7 UST Futures Roll: Nomura

Positioning Likely to Dominate H7/M7 UST Futures Roll: Nomura

(Bloomberg) -- Nomura strategists Penglu Zhao and Stanley Sun issue views on Treasury futures calendar roll.
  • Bullish TUH7/TUM7; shorts should roll early
    • Other reportable investors still the “dominant players”
    • This group’s position tends to have a stronger impact on the roll
  • Bearish FVH7/FVM7; longs should roll early
    • Asset manager positioning has been driver in recent FV roll cycles, so similar tightening pressure is expected
    • FVH7 has “meaningful size” of negative basis, which may also be bearish for the roll
  • “Mildly” bullish TYH7/TYM7; shorts should roll early
    • Non-reportable investor positioning may be “dominant driver”
    • Rise in net short positions has been “well correlated” with high open interest and lower prices since mid-2016; spread may be subject to “some widening pressure”
  • “Mildly” bullish UXYH7/UXYM7; shorts should roll early
    • Leveraged funds have largest net positions, which may make them a “larger driver of this calendar spread”
    • Rolling activities may put cheapening pressure on the roll
  • Bullish USH7/USM7; shorts should roll early
    • Net sellers may have been “more dominant drivers” of the market, may be more active in the rolling cycle and put richening pressure on the roll
  • Neutral WNH7/WNM7
    • Asset managers’ net longs highest since WN inception, now holding more than 50% of the market; should put downward pressure on the roll
    • WNH7, WNM7 CTDs have “very close maturities,” which may expose roll to “limited curve risk”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Penglu Zhao (Nomura Holdings Inc)
Stanley Sun (Nomura Holdings Inc)

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UUID: 7947283