Halister News

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- Weaker than expected U.S. Jan. payrolls data undermined macro support for equities, even as credit mkts pared earlier widening due to Fed rate-rise expectations being pushed out, Bloomberg strategist Simon Ballard writes.

• Path of least resistance for credit-mkt valuations may still be wider though, as global macro and commodity-price outlooks serve to deflate the asset-price bubble
  • Investors may be eyeing spreads for a potential re- entry, but better buying interest may struggle to materialize until we have concrete evidence of mkt stability having returned; many may consider it better to miss first 10bps of tightening than buy into risk too early, ahead of any further selloff
• EUR cash IG/HY quality curve back on steepening trend; currently 473bp (+16bp MTD), but off recent historic wide spread (492bps, Jan. 20); may encourage continued defensive investment strategy over coming week(s)
• * Risk Appetite Model hints at possibly early stage of buying opportunity

• CDX IG currently +3.1bps at 114.78 in overnight session; iTraxx Asia Ex Japan IG is currently -0.04bps at 158.88

NEWS

• Corporate News
• VW Trucks Chief Open to IPO, Acquisitions in Expansion Strategy
• Tepco Looks Overseas as Shakeup, Competition Loom at Home
• Suzuki Motor Misses 3Q Profit Estimates, Trims FY Net Outlook
• Ericsson in Talks to Buy Abengoa’s Abentel Unit: Expansion
• Asciano Sees Sweetened Qube Proposal as Superior to Brookfield
• Delhaize Bondholders Approve Change of Issuer After Ahold Merger
• Casino Sells Thai Grocer Big C for $3.5 Billion to Cut Debt

• Financial News
• National Bank Takes $119 Million Writedown on Maple Bank Inquiry
• North Pacific Bank Reports 9-Month Group Earnings Results

• Rating News
• Australia’s Iron Ore State Has Rating Cut by Moody’s Amid Rout

• Other News
• Sharp Rally Spells Bad News for Short-Selling Hedge Funds

ANALYST VIEWS

• On the macro side and longer term, if deflation sets in, corporate credit quality will eventually come under pressure: that will impact the default rate as rating transmission risks increase, and sentiment toward the asset class will take a knock. Before that happens, don’t forget event risk: creditmarketdaily.com

NEW ISSUES

• PRICED: Kommunekredit GBP100m 1.125% 2018 Tap UKT +47
• PRICED: Moby EU300m 7Y Senior Secured Notes 7.75%
• PRICED: Schlumberger Finance France EU600m 3Y MS +80strq
• PRICED: WFS Global Holding EU100m 7/2022 Tap, EU140m 7NC3
• 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.