Halister News

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- China growth and monetary policy remain central cogs in the global risk appetite machine. This, together with broader macroeconomic considerations and ’Brexit’ concerns spanning Europe and beyond, mean that attempts to take risk asset prices higher and credit spreads tighter continue to be challenged, Bloomberg strategist Simon Ballard writes.

• Corp credit remain asset class of choice for incremental yield, but macro uncertainty and commodity/energy price volatility fuel defensive investor sentiment
  • Secondary credit mkt liquidity stays lacklustre; primary mkt offers only limited funding opportunities for weaker-rated, non-financial corps
• Stronger yen overnight putting pressure on Asian equities and risk appetite; together with GBP weakness and political fragility, European credit looks set for weaker bias at open Wednesday
  • No investor capitulation as relatively low exposure to energy and prospect of further ECB stimulus in March should help underpin broad risk appetite
• Risk Appetite Model steadily retracing earlier 2016 weakness

• CDX IG currently +1.1bps at 116.01 in overnight session; iTraxx Asia Ex Japan IG is currently -0.1bps at 159.22

NEWS

• Corporate News
• Airbus Profit Gains 1.6% on A350 Ramp-Up, Break-Even on A380
• Electrolux Reiterates Market Forecasts, Core Strategy at CMD
• Hays Says 1H Performance Strong, U.K. Growth Slowed Toward End
• Weir Group FY Rev., EPS Miss; Sees 2016 to Remain Challenging
• Suez Sees Improved Growth as 2015 Revenue Beats Estimates
• Bouygues Sees Margin Gain in 2016 as Cost Cuts Lift 2015 Profit
• Peugeot FY Profit Triples, Says Reconstruction Plan Completed
• Honda CEO Revamps Carmaker That’s Expanded ‘Beyond Our Means’
• Fresenius SE FY Revenue in Line; Eyes FY19 Sales of Up to EU40b
• Iberdrola’s Full-Year Profit Rises Amid Boost From Renewables

• Financial News
• Standard Bank Sees Full-Year Profit Rising as Much as 35%
• Rathbone Total FuM Up 7.4%, Market Outlook Uncertain
• Sydbank’s 2015 Annual Report

• Rating News
• Japan’s Negative Rates Unlikely to Spur Lending, Growth: Moody’s
• Fortescue Rtgs Unaffected By 1H Results: S&P

• Other News
• U.S. Bond Returns Approaching 10% Too Good for Mirae to Pass Up
• Oil Extends Decline as Iran Calls Freeze Proposal ‘Ridiculous’
• Fischer Says Fed Has No Plans at Present to Use Negative Rates

ANALYST VIEWS

• Credit fundamentals stronger in Europe (than U.S.): less energy exposure, more modest debt accumulation, easy monetary policy. European credit should continue to outperform: Deutsche Bank
• While the Brexit debate might keep spreads at an elevated level, we think there could be an opportunity to be had if the “stay in” vote ultimately wins out and one positions for it soon: creditmarketdaily.com

NEW ISSUES

• Rhineland-Pfalz EU750m 7Y MS -5
• ESM EU1B 1.85% 2055 Tap MS +49
• ESM EU3b 10Y MS -1
• UniCredit EU1b 6Y Covered Bonds MS +1
• U.K. GBP2.75b 0.125% 2065 I/L Gilt UKTi -0.25
• KBC EU1.25b 6.5Y Covered Bonds MS +19
• EAA GBP325m 3Y UKT +60
• EIB EU300m 0.375% 3/2022 Tap MS -16
• Temasek EU600M 6Y MS +48, EU500M 12Y MS +80
• Peru EU1b 14Y MS +295
• BOC HK Branch $900M 3Y FRN, $600M 3Y and $500M 5Y Fixed
• * 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.