HALISTER1: EU CREDIT DAILY: Air of Optimism; Orange, TI, VW, Goldman, Anglo

EU CREDIT DAILY: Air of Optimism; Orange, TI, VW, Goldman, Anglo

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- Price action in corporate bonds hints at lingering caution and doubt over whether market strength will prove self-sustaining, even amid an air of optimism enveloping global credit markets as some investors perceive oversold levels, Bloomberg strategist Simon Ballard writes.
  • Initial spread tightening yday was faded as session progressed, even though magnitude of equity gains may have supported expectations for sustained rally
    • Secondary market volumes remain muted, although primary mkt capitalizing on more buoyant backdrop
  • Draghi’s dovish comments may raise hopes of further stimulus at March ECB meeting, supporting risk appetite; some investors may see it as further distortion of asset prices, muddying banks’ liquidity and balance sheet positions
  • Bank CoCo paper among strongest performing sectors in past 2 sessions, although still 20+ pts lower ytd generically; though nothing has changed fundamentally since last week, may still hold very subjective investor appeal
  • On radar today: German ZEW, U.K. PPI & CPI, U.S. Empire Manufacturing
  • Risk Appetite model spread dispersion declines at the cost of higher volatility
  • CDX IG currently -0.02bps at 120.67 in overnight session; iTraxx Asia Ex Japan IG is currently -3.4bps at 164.85
NEWS
  • Corporate News
  • Orange Earnings Rise as Bouygues Telecom Deal Talks Prolonged
  • EDF Cuts Dividend as It Sees Falling Profit After Beating Goals
  • Air Liquide Profit Rises on Europe, Emerging Market Growth
  • Telecom Italia to Speed Up Investments in Three-Year Plan
  • HeidelbergCement Ups Italcementi Goal as Profit Rises
  • Michelin Profit Rises 19% as Cost-Cutting Lifts Tire Margins
  • VW Loses European Market Share to Fiat, GM in Wake of Scandal
  • Financial News
  • UOB Profit Barely Rises as Bad-Loan Costs Check Income Gains
  • Santander’s Botin Doesn’t Rule Out Small Acquisitions
  • Goldman Fund Manager Weighs Junk Return on Yield Magnetism
  • Rating News
  • Fitch Affirms New Zealand’s Major Banks; Outlooks Remain Stable
  • Indonesia’s Revised Investment List a Credit Positive: Moody’s
  • Anglo Cut to Junk by Moody’s as Metal Rout Hinders Debt Cuts
  • Challenger Rtgs Unaffected By 1H 2016 Results: S&P
  • Other News
  • European Bank Nightmare Far From Over as Fines and Fintech Loom
  • China Bad Loans Rise to Highest in a Decade as Economy Slows
  • Yellen Heads for March Crossroads as Market Urges Policy Detour
ANALYST VIEWS
  • Addition of riskier paper will depend on how equities react. If they have found a floor and can stay around these levels or better, corporate bonds may start to show some incremental recovery; would include higher beta risk, all the way down to the CoCo bond market eventually: creditmarketdaily.com
NEW ISSUES
  • BHH EU500m 7Y Covered MS -1
  • BNG EU1.75b 7Y MS +7
  • Carnival EU500m 5Y MS +160
  • Honeywell EU4b 2Y FRN, 4Y, 7Y, 12Y Fixed Bonds
  • ING EU1.25b 5Y MS +73
  • Deutsche Hypo EU500m 7Y Covered MS +1
  • FMS Wertmanagement GBP250m 1.25% 3/2019 Tap UKT +45
  • Nordea EU750m 3Y FRN 3mE +45, EU1.25b 7Y Fixed MS +80
  • Stadshypotek EU1.25b 7Y Covered MS +19
  • 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.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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