HALISTER1: EU CREDIT DAILY: Defensive Bias; Mazda Recall, Aviva, Aeon

EU CREDIT DAILY: Defensive Bias; Mazda Recall, Aviva, Aeon

(Bloomberg) -- A defensive bias has enveloped the global credit space again this week. IG spreads remain well anchored as investors (and the ECB) favor yield at the upper end of the quality curve, but HY bond spreads have come under widening pressure from the Brexit polemic and associated political and global economic uncertainty, Bloomberg strategist Simon Ballard writes.
  • Number of U.K. property funds halting redemptions in wake of Brexit vote has intensified risk aversion
    • Haven flows favor gold and govt bonds, pushing yield structures to ever lower lvls; may further fuel demand for IG yield
  • Asian credit mkts in sharp decline overnight and 20y JGB hitting 0% for first time suggest another challenging session ahead for European risk assets today
  • Risk Appetite Model suggests that, if 2010 is our guide, volatility is set to escalate
  • CDX IG closed +1.6bps at 78.99 in overnight session; iTraxx Asia Ex Japan IG currently +2.3bps at 140.53
NEWS
  • Corporate News
  • Mazda Issues Takata Air-Bag Recall After China Regulator Demand
  • Hyundai Wia Falls to Lowest Close Since 2011 on Earnings Outlook
  • Topps Tiles LFL Revenue Rises 6.2%, Confident to Outperform Mkt
  • Aeon Reports 1Q Net Loss vs Year-Ago Profit; Oper. Profit Falls
  • Carillion Says Performance in Line With Views; 1H Rev. to Rise
  • Financial News
  • Aviva Plans to Increase 2017 Dividend Payout Ratio to 50%
  • MUFG’s Dealing Rooms Come Together to Boost Sales & Trading
  • Commerzbank May See More Cost Reductions, Job Cuts: Handelsblatt
  • Credit Rating News
  • Air Liquide Seeks To Maintain S&P Rating In ’A’ Range
  • Fitch Downgrades CAR Inc. to ’BB’; Outlook Negative
  • Fitch Downgrades China Fishery to ’D’ after US Bankruptcy Filed
  • S&PGR Affirms ’B-’ Ratings on Transportadora de Gas del Sur
  • Other News
  • Japan 20-Year Yield Goes Negative as Treasuries Rally to Record
  • Barclays Traders Face an Unwanted Benchmark for Prison Sentences
  • EU to Keep Letting Carmakers Use Emissions Devices, Welt Says
  • The Case Against Junk-Bond ETFs Where Managers Rout Indexes
ANALYST VIEWS
  • BOE’s latest Financial Stability Report highlighted the post-Brexit challenges facing U.K. banks, but the headline grabber was a relaxation of capital buffer requirements: CreditSights
  • We don’t think there is any easy way out (or any way out) from the current malaise impacting markets. Macro is still struggling despite some more upbeat data points of late and the central banks must be seeing this: creditmarketdaily.com
NEW ISSUES
  • CA Immo EU140m 5Y 1.900% Yield
  • KfW EU1b 0.375% 3/2026 Tap MS -25
  • Kommunekredit EU550m 0.25% 10/2020 Tap MS -5
  • Total EU1.25b 7Y MS +28, EU1.5b 12Y MS +43
  • BOC $2.25b 3-Part, EU500m 5Y Green Bonds
  • 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.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Topics
Leveraged Finance

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