Halister News

(To subscribe to EU Credit Daily, click here and set alert via ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- Improved risk sentiment overnight suggests investors are beginning to view cheaper valuations as a buying opportunity; however, we are still some way off from being in full “risk-on” mode, Bloomberg strategist Simon Ballard writes.

• iTraxx synthetic indexes pushing tighter as oil rises, stocks extend recent recovery; macro concerns appear allayed; cash bonds lagging, but still net tighter
  • Composition of EUR primary-market shows supply largely dominated by high-quality financial and SSA issuers; non-financial corporate issuers seem to need a “story” and attractive pricing, which alludes to persistent defensive bias among investors; nervousness of corporates to test risk appetite
  • Infamous DB 6% CoCo bond, at center of last week’s selloff, trading just above 81 from 70.2 a week ago, but still 10-20 pts off levels seen prior to February weakness
• Risk Appetite Model highlights recent recovery in spreads from “oversold” levels, but volatility gaining momentum

• CDX IG currently +0.5bp at 116.85 in overnight session; iTraxx Asia Ex Japan IG is currently -3.8bps at 161.11

NEWS

• Corporate News
• Air France-KLM Posts First Profit Since 2010, Still Seeking Cuts
• Volvo Cars 2015 Profit Triples as XC90 SUV Exceeds Targets
• BAE Systems 2015 Profit In Line With Est., Sees Higher 2016 EPS
• Nestle Sales Rise at Slowest Pace in Six Years on Asia
• Vodafone to Raise About 2.9 Billion Pounds Via Convertible Bonds
• Apple Gains Silicon Valley’s Backing in Fight Against Government

• Financial News
• Oil, Gas Pressuring Singapore Banks’ Asset Quality: Moody’s
• Rabobank Profit Rises 20% in 2015 as Loan Charges Fall
• Mizuho Bank to Cut Yen Deposit, Raise Dollar Deposit Rates

• Overnight Rating News
• Saudi Rating Gets S&P Jolt as Four Oil-Nation Credits Are Cut
• Brazil’s Rating Cut Further Into Junk Territory by S&P
• Fitch Affirms Union Insurance at IFS ’A-’; Outlook Stable

• Other News
• Nomura Sees Yen Falling More Than 10% on BOJ Negative Rates
• Treasuries Lose Out to Negative-Yield Debt in Germany and Japan

ANALYST VIEWS

• Increased prevalence of negative rates globally has given rise to questions as to whether they are helping or hurting: CS
• We all want to chase yield, but the commodity and CoCo debacles have been an annoyance and a frustration. And a reality check. For investors, it’s now about preserving capital and generating income: creditmarketdaily.com

NEW ISSUES

• Rentenbank EU250m 0.625% 2/2030 Tap MS -6
• HSH Nordbank EU500m 5Y Covered Bonds MS +18
• Rentenbank GBP100m 1.375% 12/2020 Tap UKT +40
• EIB GBP300m 2.5% 10/2022 Tap UKT +40
• Sampo EU500m 5/2019 Bonds MS +125
• Santander International Debt SAU EU1b 5Y MS +135
• SEB EU1b Long 5Y MS +73
• 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.