HALISTER1: EU CREDIT DAILY: Buoyant Performance; Apple Tax, French Banks

EU CREDIT DAILY: Buoyant Performance; Apple Tax, French Banks

(Bloomberg) -- Credit markets performed better over summer, supported by expectations of sustained, if not increased, policy accommodation, writes Bloomberg strategist Simon Ballard.
  • European investment-grade corporate bonds had a total return of 2.9% in the three months through August, compared with 1.9% in the three months earlier; have returned 6.2% so far this year
  • With govt bond yields anchored, corporate bonds remain asset class of choice for incremental yield
    • Goldilocks macro outlook remains supportive of risk appetite
  • Focus this week likely to be on Friday’s U.S. payrolls report ahead of slowdown into Labor Day
  • CDX IG closed unchanged at 74.93 in overnight session; iTraxx Asia Ex Japan IG currently -0.4bps at 113.25 and iTraxx Australia quoted -0.6bps at 99.90
NEWS
  • Corporate News
  • Apple’s Day of Reckoning Comes With Billion-Euro Tax Risk
  • Mitsubishi Motors Awaits Japan Regulator’s Fuel Economy Findings
  • Samsonite Sees Tumi Sales Doubling to $1 Billion on Global Push
  • Tata Motors to Change Supplier Structure, Refine Supply Terms
  • Eskom Seeks South Africa Talks to Review Independent Power
  • Debt-Led Phone War May Blow $74 Billion Hole in India Wallet
  • Financial News
  • Qatar Bank CEO Says Liquidity Improving After $9 Billion Bonds
  • Four Nomura Investment Bankers Said to Leave as Firm Shrinks
  • UniCredit Weighs Combining Asset Mgr With Intesa’s: Messaggero
  • Brexit Boosts Lure of Sticky Deposits for U.K. Banking Startups
  • Capital Group Increases Credit Suisse Stake to 5.1%, Filing Says
  • France’s Montebourg Says He Would Consider Nationalizing Banks
  • Credit Rating News
  • S&PGR Affirms SoftBank Group ’BB+’ Rating; Outlook Stable
  • Moody’s Affirms Japan’s A1 Rating and Stable Outlook
  • Other News
  • Morgan Stanley Says Forget September as JPMorgan Tips Weak Jobs
ANALYST VIEWS
  • What’s driving it (market performance)? For European corporate debt, it’s central bank QE activity and the low- yielding environment seeing investors look for a fixed asset offering a relatively decent income stream: creditmarketdaily.com
  • The market backdrop for European credits remains favorable. Last week saw further inflows in both European investment grade and high yield funds: Danske
NEW ISSUES
  • No New Issues Monday
  • 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.
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Source: BFW (Bloomberg First Word)

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