Halister News

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- BIS comments citing uncertainty over the transmission mechanism of further negative rates should have come as little surprise, but credit markets may nevertheless be prone to a sell-off if the ECB fails to deliver at a rate decision this week, Bloomberg strategist Simon Ballard writes.

• Such is the degree of expectation amid a challenging global macro backdrop, that risk-asset price stability mimics an addict and remains dependent on the “dealer” coming up with the next monetary policy “fix”
• Corp credit will still be seen by many investors as offering compelling buy-and-hold incremental yield opportunities, if they can tolerate mark-to-market risk
  • Current weakness in HY spreads are driven by fears that ECB will disappoint at its March 10 rate decision
  • S&P data shows European HY default rate fell to 1.4% in Feb from 1.8% in Jan
  • From a macro perspective, expect focus to be on Eurozone GDP data today at 10am GMT

• Risk Appetite model’s robustness reflects underlying demand for spread product, even as sub-IG bond pricing remains under pressure
• CDX IG is currently -0.1bps at 93.82 in overnight session; iTraxx Asia Ex Japan IG is currently +0.5bps at 151.64

NEWS

• Corporate News
• RWE Posts Loss at U.K. Business After Customer Defections
• Merck KGaA Profit Beats Estimates On Life-Sciences Business
• SAS Maintains FY Outlook in 1Q Results
• Lindt Aims to Surpass Godiva’s Chocolate Retail Network by 2020
• U.K. LFL Feb. Retail Sales Up 0.1% Y/y, BRC Says
• Biggest LNG Buyer Turning Seller as Reload Terminal to Start
• Veolia to Sell Up to EU700m of Convertible Bonds

• Financial News
• Ex-Goldman Banker to 1MDB Fund Said Subpoenaed in U.S. Probe
• Negative Rates Fail to Spur Japan Bank Loans in First Month
• Spain’s Bad Bank Sareb Refinances Half Its Debt: Expansion
• CBA, NAB, Westpac execs grilled in bank bill rigging probe

• Rating News
• Bimbo Credit Outlook Raised to Stable From Negative by Moody’s
• S&P Affirms ’BBB’ Rtg On China Travel Service; Otlk Stable
• Fallen Angels Stoke Credit Risk Among Junk Issuers: Moody’s

• Other News
• Pimco Says Time to Buy Riskier Debt as U.S. to Avoid Recession
• Noble Group Debt Back Above 60 Cents as Commodity Distress Eases

ANALYST VIEWS

• This week could well define not just the first term, but the first half of 2016 with respect to performance. It has the potential to deliver a binary outcome: creditmarketdaily.com

NEW ISSUES

• BFCM EU1.5b Long 3Y MS +48
• CAFFIL EU350m 1/2035 Covered Bond Tap MS +34
• CFF EU1b 6Y Covered MS +15
• HSBC Holdings EU3.25b Two-Part Deal
• International Flavors & Fragrances EU500m 8Y MS +142
• Morgan Stanley EU1.5b 8Y MS +145
• State of Saarland EU300m 3/2023 FRN 3mE +6
• 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.