HALISTER1: EU CREDIT DAILY: Fragile Optimism; Banks’ Fed Tests, Gatwick Up

EU CREDIT DAILY: Fragile Optimism; Banks’ Fed Tests, Gatwick Up

(Bloomberg) -- The Brexit polemic may be far from resolved and the outlook for GBP risk mkts anything but clear, but credit mkts are rallying back for now. Investor sentiment is fragile though, due to the extent of uncertainty now embedded into the U.K./EU political and economic landscape, Bloomberg strategist Simon Ballard writes.
  • Risk asset mkts benefiting from perception that U.K. ‘Leave’ vote may not necessarily imply full ’Brexit’; very uncertain outlook though as EU calls for prompt triggering of Article 50
    • Corp bond mkt rebounding on idea that any eventual ‘Brexit’ would only take effect after long negotiation process; does not present near-term macro shock risk
    • More cautious investors may view short-term mkt strength as opportunity to take profit / re-set shorts
  • ECB CSPP and continued low yield environment also continue to enhance demand dynamics
  • Risk Appetite Model shows relative stability in spreads, but with modest pickup in volatility
  • CDX IG closed -3.3bps at 81.27 in overnight session; iTraxx Asia Ex Japan IG currently -1.6bps at 141.85
NEWS
  • Corporate News
  • Monsanto Earnings Disappointment May Help Bayer With Its Bid
  • SoftBank Said to Face Inquiry Over Alleged Arora Conflicts
  • Gatwick Airport FY Rev Up 5.5% To GBP 673.1m
  • Redde Expects FY Results to ‘Slightly Exceed’ Estimates
  • Kappahl 3Q Operating Profit, Gross Margin Beat Estimates
  • Financial News
  • U.S. Banks Beat Fed’s Test as Deutsche Bank, Santander Fail Anew
  • UBS’s Murphy and Naylor Leave as Orcel Overhauls Senior Team
  • JPMorgan Plans $10.6b Buyback, Maintains Qtr Div. at 48c/Shr
  • Goldman Cuts Japan FY16 EPS; Topix Target Implies Limited Return
  • UniCredit Narrows CEO Candidate Shortlist to Three: Sole
  • Legal & General Retirement Unit Experienced Strong Sales in 1H
  • Credit Rating News
  • Moody’s downgrades outlook on Singapore’s banking system to negative
  • Moody’s places ratings of four Hungarian banks on review for upgrade
  • Brexit Has No Direct APAC Sovereigns, Bank Ratings Impact: Fitch
  • Other News
  • U.K. Bonds Celebrate as Spread to U.S. Widens to 15-Year High
  • China’s Analysts Haven’t Been This Wrong on Equities Since 2009
  • World’s Riskiest AAA Currency Exposed as Brexit Divides Markets
  • Spain Doubles Return for Bond Investors This Year With Rajoy Win
NEW ISSUES
  • State of Hessen EU875m 0.375% 7/2026 Tap MS -7
  • Molson Coors Brewing EU800m 8Y MS +110
  • 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)

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