Halister News

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- As iTraxx Crossover flirts with 500, after surpassing the psychological 400 level just a week ago, it remains comfortably below the historic Feb. 2009 high of 1084. Credit markets are unsure whether Armageddon has been avoided or just delayed this week though; no wonder investor sentiment is cautious at best, Bloomberg strategist Simon Ballard writes.

• Notwithstanding market volatility and spread weakness as Fed and global macro fears persist, it remains to be seen if the damage is below the waterline and fatal
  • The EUR primary space continues to show signs of life, although the market is currently the reserve of top- rated issuers prepared to pay up
• Risk Appetite Model begins to pare recent improvements as investor caution rises on flight to quality trades

• CDX IG currently -0.7bps at 125.20 in overnight session; iTraxx Asia Ex Japan IG currently +0.4bps at 177.959

NEWS

• Corporate News
• Rolls-Royce Makes First Dividend Cut Since 1992 as Crisis Mounts
• Renault Profit Surges 44% on European Demand for Kadjar SUV

• Financial News
• Deutsche Bank Ranks Last on Capital Gauge Where Citigroup Excels
• Commerzbank Swings to Profit, Led by Consumer Bank Profit Surge
• UBS Wins Lawsuit Against Singapore Private Wealth Client Tan

• Rating News
• Deutsche Bank CoCo Ratings Cut by S&P on Earnings Uncertainty
• Moody’s Concludes Reviews for 11 Us Ba-Rated E&P Cos.

• Other News
• Five-Decade Market Pro Who Called Bond Rally Sees 1% U.S. Yields
• Oil Rebounds From Lowest Close in 12 Years as Volatility Surges

ANALYST VIEWS

• Markets are likely to remain volatile near term; though selloff feels overdone, sentiment in bank credit is likely to be hostage to ongoing weakness in bank equities: Barclays
• Current volatility not the onset of some new crisis but rather a painful part of a normalization, with which the Fed intends to persist: CS
• X-Over heading to 500bps isn’t good, but it isn’t capitulation. Credit spreads going higher isn’t capitulation either: creditmarketdaily.com
• Dynamics are very negative right now, and with every further blow, negativity is gaining momentum. This is made painfully clear by HY fund flows: Commerzbank

NEW ISSUES

• PRICED: Hamburg EU500m 4Y FRN 3mE +1
• POSTPONED: Leaseplan EU1.5b Equivalent 3-Part Notes
• 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.