Halister News

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- We may be some 16 weeks away from the U.K. referendum on EU membership, but uncertainty over the result and its implications for Britain and the Union is already affecting corp credit; risk aversion has spiked, liquidity has declined, cash and synthetic spreads have gapped wider. If these trends continue apace, credit mkts could be paralyzed by Easter, Bloomberg strategist Simon Ballard writes.

• China equities plunge overnight as money-mkt rates tighten; IMF urges action for growth ahead of Friday’s meeting of G-20 finance ministers and central bankers in Shanghai
• GBP credit also key factor in current mkt malaise, showing clear underperformance vs EUR IG since beginning of the year
  • GBP/EUR IG spread setting new historic wides, but failing to spark any better buying interest or anticipation of near-term spread re-compression

• Risk Appetite Model shows performance stalling in volatility and spread dispersion as generic mkt sentiment deteriorates
• CDX IG currently -2.7bps at 115.42 in overnight session; iTraxx Asia Ex Japan IG is currently -1.04bps at 160.61

NEWS

• Corporate News
• Bayer’s Profit Misses Estimates on Drop in Crop Sciences
• Countrywide 2015 Op. Profit Down 37%; Keeps 2016 Outlook
• Veolia Confirms Outlook as Full-Year Earnings Meet Expectations
• Rentokil Initial FY Rev. Meets Ests., Confident of Progress
• BAT 2015 Rev., Adj. EPS Beats; Adj. Oper. Profit In Line
• Junk Rout Hands Fortescue Scope to Slash Its Debt Pile Even More

• Financial News
• Lloyds 2015 Underlying Profit Meets Ests; Net Income Drops
• China Said to Agree $7.7 Billion of Bad Loan Securitization
• Swedish FSA Sets Nordea Capital Ratio Requirement at 20.1%

• Rating News
• Brazil Downgraded to Junk by Moody’s With Negative Outlook
• Rio Tinto Dividend Cut Plan Fails to Stop Moody’s Downgrade
• Oil Slump to Intensify Pressure on Banks Globally, Moody’s Warns

• Other News
• Banks Can’t Fail as Europe Rolls Out Post-Crisis Stress Test
• Bullard Says He Sees Inflation Expectations Stabilizing
• ‘Brexit’ Blues as Plunging Currency Pounds British Vacationers

ANALYST VIEWS

• Corporate bond spreads are going wider into the big moves we see in equity and currency markets, but it does seem more of a case of the Street being defensive on “low’ish” selling interests: creditmarketdaily.com

NEW ISSUES

• State of Hessen EU250m 0.375% 3/2023 Tap MS -7
• Hamburger Sparkasse EU500m 6Y Covered MS Flat
• FMS Wertmanagement GBP100m 1% 4/2018 Tap UKT +51
• Sparebanken Vest Boligkreditt EU500m 5Y Covered MS +18
• LyondellBasell Industries EU750m 6Y MS +182
• Dexia Credit Local GBP300m 3Y UKT +90
• 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.