Halister News

(Bloomberg) -- Political turmoil and economic uncertainty likely to drive continued risk mkt weakness early this week as fallout from Brexit referendum gains momentum, Bloomberg strategist Simon Ballard writes.

• Turmoil may undermine appeal of GBP risk assets, reversing small stability seen Friday
• GBP cash bonds (less liquid) may outperform synthetics (more liquid)
  • Cyclicals to remain under pressure (tech, energy, consumer, Financials); utlities, healthcare, telecoms may outperform
  • Decompression of GBP and EUR quality curves could be key theme as investors implement defensive investment strategies
• Volatility and uncertainty likely to keep many investors sidelined; damp corp new issuance
• Investors may now favor USD credit risk over GBP, EUR risk; better transparency, perceived capital preservation
• Risk Appetite Model: shades of 2010 as Brexit triggers sharp spike in volatility

• CDX IG closed +0.6bps at 87.03 in overnight session; iTraxx Asia Ex Japan IG currently +5.8bps at 150.02

NEWS

• Corporate News
• Scentre Group Redeems A$0.6b of A$1.2b Property Linked Notes
• Tatts Sees Profit at Low End of Ests Amid Tight Wagering Margins

• Financial News
• Aviva Says Capital Position Is Resilient to Market Stress
• HSBC Sees NBAD, FGB Merger Synergies of 11.4 Billion Dirhams
• SNB Says Negative Rates, Interventions Form Basic Policy: Op-Ed
• Investment Banks Are Hit by Brexit Era of Turmoil, Few Deals

• Credit Rating News
• S&PGRBulletin: QBE Well Placed To Manage EU Instability

• Other News
• Osborne says U.K. economy will weather Brexit
• Pimco, JPMorgan See Asian Bond Stability Appealing After Brexit
• U.K. Should Take Time to Reflect, EU Parliament’s Lamberts Says
• Investors Map Post-Brexit Strategies Amid Global Market Upheaval
• Puerto Rico Default Matters Little With Reputation in Ruin

ANALYST VIEWS

• We expect stability (this week) then some recovery and correction from this predictable and horrible overreaction - and then excitement and anticipation as we all get back to embracing our new future and making this whole “Brexit thing” work: creditmarketdaily.com

NEW ISSUES

• No Syndicated New Issuance Friday
• 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.