Halister News

(Bloomberg) -- Focus likely back on the hunt for yield trade early this week as the RBA cut Aussie rates in the latest central bank effort to counter global disinflation pressures, Bloomberg strategist Simon Ballard writes.

• With many corp bond investors already prepared to accept rarefied yields, the specter of negative yields on corp new issues looms large
  • Low corp bond yields may currently be acceptable while interest/deposit rates trend even lower, but beware potential negative reaction in corp bond price performance if/when rates begin to rise
• Sovereign default risk back in the spotlight this week as pressure builds on Puerto Rico; Government Development Bank may avoid default on $400m payment for now, but hedge funds who own its debt are circling
• Earnings season approaching critical mass; UBS latest casualty of mkt pressures as posted 64% decline and missed estimates
• Risk Appetite Model starts May firmly camped around YTD tights

• CDX IG closed -0.6bps at 77.91 in overnight session; iTraxx Asia Ex Japan IG is currently +0.5bps at 141.36

NEWS

• Corporate News
• BMW First-Quarter Profit Falls 2.5% on Development Spending
• Lufthansa 1Q Loss EU53m, Confirms Full-Year Forecast
• Solvay 1Q Adj. Ebitda Tops Ests. on Lower Polyamide Costs
• Swisscom 1Q Rev. In Line With Ests.; Keeps Outlook Unchanged
• Fresenius Medical 1Q Rev., Basic EPS in Line; Keeps Forecast

• Financial News
• UBS First-Quarter Profit Drops 64%, Missing Analysts’ Estimates
• HSBC’s Quarterly Profit Beats Estimates as Costs Contained
• Aberdeen Asset Management 1H Underlying Pretax Drops 40%
• BNP Paribas Profit Unexpectedly Rises on Lower Provisions
• Commerzbank Quarterly Profit More Than Halves as Markets Suffer
• ANZ Bank 1H Cash Profit A$2.782b; Est. A$3.577b

• Credit Rating News
• Fitch Affirms Tata Motors at ’BB’; Outlook Stable
• Aussie Debt Rising Faster Than Euro Area Puts AAA Rating at Risk
• Manitoba Telecom May Be Raised by S&P on Acquisition by BCE

• Other News
• Australia One-Year Yield Falls to Record After RBA Cuts Rates
• Deutsche Bank Americas Chief Brand Said to Jump to PJT Partners

ANALYST VIEWS

• Hopeful for corporate risk through May. It’s not always the brightest of months for risk assets, but we believe credit markets in Europe will continue to perform relatively well given the ECB’s interest: creditmarketdaily.com

NEW ISSUES

• Mortgage Society of Finland EU250m 5Y Covered MS +22
• 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.