Halister News

(Bloomberg) -- U.S. election aside, financial market focus this week likely to be on any further meaningful rise in bond yields. Corporate credit spreads remain anchored for now, but sustained higher rates could trigger weaker bias to credit spreads, Bloomberg strategist Simon Ballard writes.

• Government bond weakness, higher yield structure, may also result in steeper corp bond quality curves as investors able to hit yield bogey while shifting into better rated assets
  • Rising bond yields erode total return profile of risk assets; may damp risk appetite
• New FBI analysis of Hillary Clinton emails reignites presidential election uncertainty, may fuel near-term defensive bias across U.S. credit market

• Bloomberg Barclays Eur-Agg Corporate index closed Friday at 109bps (flat); Bloomberg Barclays Eur HY index closed at 372bps (+4bp)
• CDX IG closed Friday +1.4bps at 77.63; iTraxx Asia Ex Japan IG is currently +1.0bps at 116.53 and iTraxx Australia quoted +0.7bps at 103.75

NEWS

• Corporate News
• WPP 3Q Sales Rise 2.8% on U.S., European Ad Spending
• Sony Cuts Forecast on Impairment for Sale of Battery Unit
• Centamin Sees 2016 Gold Output Toward Upper End of Guidance
• ASML Affirms 2020 Target of Annual Revenue of EU10b
• Panasonic Cuts FY Earnings Forecasts on Stronger Yen
• Honda Raises Full-Year Profit Forecasts After 2Q Beat

• Financial News
• ANZ’s DBS Deal Marks Latest Retreat From Asia Wealth Management
• Goldman Sachs Alumni Said to Start Macro Hedge Fund in Asia
• Chinese Banks’ ‘Scramble’ for Profit Sees Bad-Loan Buffers Slide
• SNB Records Nine-Month Profit on Foreign Currency Holdings, Gold
• Raiffeisen Bank Plans to Open Branch in Iran: Tehran Times
• ANZ Bank Weighs First Aussie Mortgage Bond Sale in Over a Decade

• Rating News
• Macquarie Rating Outlook Lowered as S&P Warns on Aussie Economy
• Moody’s maintains stable outlook on Portugal’s banking system amid modest economic recovery
• S&PGR: Outlooks On 25 Australian Financial Institutions To Neg
• S&PGR Upgrades Liberty Financial To ’BBB/A-2’; Outlook Neg
• ChemChina Assigned BBB Rating With Stable Outlook at S&PGR
• S&P cuts credit rating outlook for raft of smaller (Aussie) banks due to housing market worries
• S&PGR Afms AXA Life Insurance At ’A+’; Outlook Remains Stable

• Other News
• Clinton Allies Go After Comey as Probe Scrambles Campaign
• European Banks Stuck With $1.3 Trillion of Bad Loans, KPMG Says
• Deutsche Bank AT1s Look More Attractive Than Equity: UBS
• Carney’s Future at BOE Overshadows U.K. Interest-Rate Decision
• U.S. Election Guide to Markets: What to Watch as Results Come In

ANALYST VIEWS

• Credit spreads will hold out into year-end, with support from the ECB/BOE QE. As for market yields, the U.S. election, the next Fed meeting and the incoming (November) data is going to determine whether IG returns are in the 4%- handle complex or 6%+, while HY should see out 7-8%: creditmarketdaily.com
• Markets will remain nervous in light of the tail risks waiting in the coming weeks. Fed, US elections, OPEC production cuts, December ECB meeting, Italian referendum, the list of potential stumbling blocks remains impressive. Markets could get spooked easily and this could not only see weaker sentiment increasingly translate to widening credit spreads, but also would most likely weigh on activity in primary: Commzerbank

NEW ISSUES

• Beazley Re $250m 10Y Tier 2 5.875% at Par
• National Express GBP400m 7Y UKT +165
• Together GBP220m 5NC2 Snr PIK Toggle 10.5% at Par
• TVO EU500m Long 6Y MS +260
• Whirlpool Finance EU500m 10Y MS +87
• Vandemoortele EU75m 7Y Subordinated Notes at 3.418%
• Wind Hellas EU250m 5NC2 Snr Sec Notes 10% Coupon
• AMC $595m 10NC5 Sub Notes 6% area, GBP 250m 8NC3 6.5% area
• Fidelity International EU400m 10Y MS +200
• Owens-Illinois EU500m 8NCL Senior Notes 3.125%
• 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.