Halister News

(Bloomberg) -- A buoyant primary market suggests that the risk-asset volatility seen earlier in the week has now eased; but lingering weakness across secondary corporate spreads highlights persistent investor uncertainty over global rates and macro outlook, Bloomberg strategist Simon Ballard writes.

• Low-rated, high-yield part of corporate credit curve remains most at risk from rate outlook, perceived Fed rate tightening; more attractive entry points may lie ahead
  • Higher yield structure will raise debt service costs, weaken balance sheets; allow investors to hit yield bogey in better-rated assets
• Asian credit modestly weaker again overnight, after weak U.S. close, may damp sentiment at EUR open; focus on U.K. MPC, although no rate change expected
• Risk Appetite Model finds stability, but off recent lows in volatility and spread dispersion
• Bloomberg Barclays Eur-Agg Corporate index closed yday at 109bps (+1bp); Bloomberg Barclays Eur HY index closed at 389bps (+4bps)
• CDX IG closed +0.4bps at 80.08 in overnight session; iTraxx Asia Ex Japan IG currently +0.9bps at 112.94 and iTraxx Australia quoted -0.2bps at 99.94

NEWS

• Corporate News
• U.K. Said to Approve EDF’s 18-Billion Pound Nuclear Project
• EU28 August Car Registrations Rise 10% Y/y to 0.819m Units
• Next 1H Pretax In Line; Maintains FY Sales, Profit Guidance
• John Lewis 1H Adj. Pretax Falls, Trading Pressures to Continue
• Morrison 2Q LFL Sales, 1H Underlying Pretax Beat Estimates
• H&M Sales Miss Estimates in August, 3Q
• Fiat Chrysler Said to Explore China Venture With BAIC Group
• Vodafone South Africa Said to Win $350 Million State Deal
• Apple Says Initial IPhone 7 Plus Sold Out For Its Retail Stores
• Panda Bond Proceeds to Redeem CNH Debt, Veolia Says

• Financial News
• Lloyds Names Deutsche Bank’s Brinkmann Asia Banking Unit CEO
• Swiss Bankers Association Hopes for EU Market Access: NZZ
• Australian Bank Regulator Outlines Counterparty Risk Proposals

• Credit Rating News
• RR Donnelley Cut to B1 by Moody’s on Spinoff Transactions

• Other News
• Focus on Fed Hike’s Timing Is a Distraction
• Ford, Rolls-Royce Skip Paris as Car-Show Glitz Fades in Web Age

ANALYST VIEWS

• A wave of supply and a focus on global monetary policy currently drive credit; higher beta segments from corporate hybrids to HY and banks’ AT1 widen on the back of rising risk aversion ahead of crucial headline events. These themes are likely to remain with us, and we would wait for better entry levels before adding risk in these segments: Commerzbank
• We remain bullish bond mkts and think the recent weakness will be reversed in its entirety, the 10-year bund yield will see -0.10% before it sees +0.10%, and the corp bond market will continue to see good support for a while yet: creditmarketdaily.com

NEW ISSUES

• Afreximbank $150m Tap of 2021 Bond at MS+250 bps
• BP Capital Markets EU850m 8Y MS +65
• IMS Health $1.05b 10NC5 5%, EUR 625m 8NC3 3.5%
• KfW GBP300m 1.125% 12/2019 Tap UKT +27
• National Grid Gas EU750m 8Y MS +55
• Compagnie De Saint-Gobain EU1b 0% 3/2020 MS +30
• Lowell GFKL EU230m 5NC1 Snr Secured FRN E +550, OID 99.5
• Thom Europe EU190m 7.375% 7/2019 Tap at 104.50
• Swedish Match EU300m 8Y MS +78
• Spectrum Brands EU425m 10NC5 4%
• 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.