Halister News

(Bloomberg) -- Risk assets may come under some pressure post Asian market weakness as probability of a July Fed rate increase has risen to around 54% from 48% at the end of last week, Bloomberg strategist Simon Ballard writes.

• Still, secondary cash corporate bonds should remain consistently better bid vs more liquid and volatile synthetic indexes owing to buy-and-hold attributes
• Deutsche Bank likely in spotlight this morning as Moody’s cuts and amid reports that the SEC is looking at Deutsche Bank trades
  • M&A also in focus as markets digest details of proposed Bayer-Monsanto acquisition
  • Bayer CDS, hybrid spreads stabilizing at wider levels on implied debt financing; company still targeting IG rating for hybrid debt post transaction
  • CDS +12bps over week, but off wides; hybrid bonds off lows, ~3pts lower vs week ago
• Risk Appetite model reflects current underpinning to corp bond space as volatility declines to ytd low

• CDX IG closed +0.3bps at 83.52 in overnight session; iTraxx Asia Ex Japan IG currently +0.3bps at 146.32

NEWS

• Corporate News
• Sony’s Profit Forecast Misses Estimates on Quake Damage Costs
• Kingfisher 1Q B&Q U.K., Brico Depot LFL Sales Beat Estimates
• Aveva FY16 Revenue Falls 3%; Adj. Pretax Down 18%, Misses Ests.
• UK Mail Says Hub Now Operating Well, Sees 2H Weighting
• Severn Trent Revenue In Line, Underlying PBIT Beats Estimates
• De La Rue FY Rev. From Cont. Ops Increases, Orders Grow
• Monsanto Trading Below Bayer Offer Shows Regulatory Anxiety

• Financial News
• SEC Said to Look at Deutsche Bank Trades
• AIB Says Profitability Strong in 1Q; NIM Progress Continues
• Singapore Orders BSI Bank to Shut Down Amid 1MDB Probe
• Nationwide B.S. NBS Preliminary Results Announcement

• Credit Rating News
• Deutsche Bank Ratings Cut by Moody’s on Struggle to Overhaul
• Aussie Bonds Set to Lose Highest-Yielding AAA Spot to Singapore

• Other News
• Negative-Rate Pain Fuels Japan Demand for Derivatives to Opt Out
• Brexit Seems Increasingly Unlikely to Corporate-Debt Investors

ANALYST VIEWS

• This (is now) the best May month ever for (non-financial corp) issuance (€39.3b)... previous high of €38.7b set in 2009 has been passed effortlessly, with still a week’s worth of business to get through: creditmarketdaily.com

NEW ISSUES

• 3M Company EU500m 2/2022, EU500m 15Y
• ABN Amro Bank EU500m 6Y Green Bonds MS +52
• Aurizon Network EU500m 10Y MS +265
• City of Bremen EU500m 7Y MS -8
• EFSF EU3b 10Y MS -8, EU2b 31Y MS +29
• Sydbank EU500m 2Y FRN 3mE +55
• Viesgo EU400m 10Y MS +233
• 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.