HALISTER1: EU CREDIT DAILY: Italian Weakness; Credit Suisse Job Cuts

EU CREDIT DAILY: Italian Weakness; Credit Suisse Job Cuts

(Bloomberg) -- The referendum vote against Italian Prime Minister Renzi’s constitutional reforms could have the greater impact on risk markets early this week, in spite of pro-European Van der Bellen’s victory in Austria Sunday, Bloomberg strategist Simon Ballard writes.
  • The specter of renewed political crisis and EUR currency weakness could damp credit market performance over coming days and into year-end
  • Italian banks likely biggest casualties of Renzi defeat and resignation; uncertainty may shroud EU5b recapitalization of Monte Paschi di Siena, spreads likely to come under pressure
  • EUR credit markets set to open with defensive bias Monday; Asian risk assets softer overnight with equities lower and credit spreads wider
    • Financial sector spreads under pressure; iTraxx Subordinated financials currently +5bps
  • Bloomberg Barclays Eur-Agg Corporate index closed Friday at 127bps (+1bp); Bloomberg Barclays Eur HY index closed at 418bps (-1bps)
  • CDX IG closed Friday at 72.85 (-0.8bp); iTraxx Asia Ex Japan IG is currently +0.4bps at 125.79 and iTraxx Australia quoted +0.3bps at 109.33
NEWS
  • Corporate News
  • Nissan China Nov. Vehicle Sales Rise 10.7% on Year
  • Telstra hires Tesla director as new COO
  • Purplebricks 1H Revenue Grows 159%; Confident Outlook for Future
  • Financial News
  • Amundi Said to Be in Lead to Buy UniCredit’s Pioneer Unit
  • Credit Suisse to Cut as Many as 1,300 Swiss Jobs, SamS Reports
  • BNP Chairman Sees Big Changes to City of London After Brexit
  • Rating News
  • Moody’s Says Key Resignation Has No Implications for NZ Ratings
  • Losing Its Coveted AAA Rating May Be Just What Australia Needs
  • Japan Life Insurance Industry on Negative Outlook at Moody’s
  • Fitch Outlook for Chinese Banking Sector Is Negative in 2017
  • Other News
  • Renzi Quits as Italy Referendum Defeat Deepens Europe’s Turmoil
  • Renzi’s Italian Fate Also Overshadows Draghi’s Path Ahead for QE
ANALYST VIEWS
  • There is a non-trivial probability that we give the rest of 2016’s spread performance back in the next couple of weeks - despite the ECB’s heavy lifting of corporate bonds from its corporate QE programme, where last week’s purchases will be known later today. It does feel like the current path of least resistance is lower and wider, respectively: creditmarketdaily.com
NEW ISSUES
  • Catalent EU380m 8NC3 Senior Notes 4.75%
  • Cofinimmo EU55m 8Y Green, Social Bond MS +150
  • Socfin EU80m 5Y 4% Coupon
  • Thomas Cook EU750m 6/2022 NC2.5 6.25%
  • European IG credit pipeline here and HY credit pipeline 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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