HALISTER1: EU CREDIT DAILY: Bifurcated Story; Telefonica, RBS Report Losses

EU CREDIT DAILY: Bifurcated Story; Telefonica, RBS Report Losses

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- A somewhat bifurcated story is playing out in credit mkts as the week evolves: iTraxx, EUR IG cash indexes portray a mkt keen to ratchet spreads tighter from levels that some investors may have perceived as oversold a week ago, while weaker price action in EUR HY index has underscored a lingering defensive sentiment, Bloomberg strategist Simon Ballard writes.
  • Volatility fueled by Brexit debate may have faded a little this week, but credit is still highly susceptible to spread gyrations as systemically important issuers declare their solidarity with either ‘in’ or ‘out’ camps
    • Concerns among some investors that rest of EU may not be immune to ‘risk off’ if Brexit probability rises; could intensify spikes in risk aversion, favor up-in-quality investment strategies
  • Hopes of ECB stimulus expansion on March 10 likely key pillar of support for near-term EUR risk appetite; may drive EUR credit outperformance vs USD and GBP credit
  • Risk Appetite Model highlights tentative retracement in risk valuations from early 2016 weakness
  • CDX IG is currently quoted -1.3bps at 112.71 in overnight session; iTraxx Asia Ex Japan IG is currently -3.8bps at 158.47
NEWS
  • Corporate News
  • Telefonica Has Loss on Restructuring Costs; Sales Beat Estimates
  • IAG FY Earnings Matches Est.; Sees 2016 Profit Growth Similar
  • Rightmove 2015 Rev., Underlying Oper. Profit Beat Ests.
  • Eni Makes a Loss in Q4 as Lower Oil Prices Bite
  • Nintendo Cuts Annual Profit Forecast Amid Weak Christmas Sales
  • BASF Sees ‘Slight’ Profit Drop as Customers Get Low Oil Benefit
  • Financial News
  • RBS Posts Eighth Consecutive Annual Loss on Misconduct Charges
  • Erste Bank 4Q Net Income Beats; Planned Dividend In Line
  • Bank of America Reports 6.26% Delta Lloyd Stake in AFM Filing
  • Rating News
  • Fitch Affirms Fortescue Metals’ LT IDR at ’BB+’/ Negative
  • Moody’s Downgrades Multiple Brazilian Banks, One Bank Holding
  • S&P Affirms Netflix ’B+’ Ratings; Outlook Revised To Stable
  • Other News
  • IMF’S Lagarde Still Sees Growth Even Amid Growing Global Risks
  • Man Who Called Emerging-Market Rout Has a Warning for the Bulls
ANALYST VIEWS
  • IG spreads are 30bp wider since the beginning of the year. That’s not great in isolation, but it is fantastic all things considered: creditmarketdaily.com
NEW ISSUES
  • Schleswig-Holstein EU600M 6Y FRN 3mE +5
  • Bremer LB EU300m 4Y MS +85
  • NWB Bank GBP250m 12/2019 UKT +58
  • UNEDIC EU2b 10Y FRTR +18
  • RBC GBP350M 3/2019 Covered FRN 3ML +50
  • UBS Holdco EU750m 8Y MS +190
  • Nationwide BS EU1.25b 1/2021 Covered Bond MS +21
  • Banco Popular Espanol EU1.5b 6Y Covered MS +88
  • Slovenia EU1.5b 3/2032 MS +145
  • 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.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Christine Lagarde (International Monetary Fund)

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