HALISTER1: EU CREDIT DAILY: Muted Concerns; EU Car Sales Slow, SHBASS Beats

EU CREDIT DAILY: Muted Concerns; EU Car Sales Slow, SHBASS Beats

(Bloomberg) -- Corporate credit market seems to have taken BOE’s decision yesterday to leave rates on hold in its stride, though concerns about imbalance between global credit valuations and macro fundamentals persist, Bloomberg strategist Simon Ballard writes.
  • Market sentiment likely damped this morning by terror attack in Nice overnight, a reminder of persistently elevated geopolitical risk
    • But cash bond spreads may maintain tightening bias overall, buoyed by a dovish outlook for U.K., ECB rates/corporate-sector purchase plan for bonds through the summer
    • Investor focus may remain on defensive asset-allocation strategies; there is concern over imbalance between risk valuations, sluggish global economic growth and Brexit impact
  • Q2 corp earnings may beat median forecast, providing a fillip for risk appetite; but beware differential between earnings and revenues, could dent sentiment, trigger profit- taking
  • Risk Appetite Model strengthens post MPC and on robust Q2 earnings numbers
  • CDX IG closed +0.1bps at 76.50 in overnight session; iTraxx Asia Ex Japan IG currently -3.0bps at 117.63
NEWS
  • Corporate News
  • European June Car Sales Slow as Brexit Vote Reduces Confidence
  • Swatch Says First-Half Profit Slumped as Much as 60 Percent
  • Infosys Lowers Full-Year USD Revenue Growth Outlook, Shares Drop
  • Husqvarna 2Q Operating Profit Beats Estimates, Sales Miss
  • Firstgroup 1Q Rev Fell 1.4% in Constant FX; No Change to Yr View
  • Samsung in Talks With BYD to Buy Stake in Electric-Car Maker
  • Volkswagen ordered to provide emissions results to Federal Court
  • Financial News
  • Handelsbanken Profit Beats Estimates as Card Sale Boosts Income
  • JPMorgan’s 2Q Is Good Read-Across for European IBs, HSBC Says
  • Credit Rating News
  • Hungary’s debt dynamics “benign” in 2016-17 - Moody’s
  • Fitch Affirms ENN at ’BBB’; Outlook Stable
  • S&PGR Downgrades Province of Manitoba To ’AA-’ From ’AA’
  • Other News
  • France in Convulsions as Third Big Terror Attack Upends Hollande
  • Ericsson Chief Faces Pressure as Wireless Market Awaits 5G Boost
ANALYST VIEWS
  • Beta dominates as macro themes drive spreads, but credit metrics remain key for limiting downside at times of negative yields and tiny return prospects: Commerzbank
NEW ISSUES
  • State of Berlin EU600m 1% 5/2032 Tap MS +4
  • L-Bank $1.75b Reg S 5Y MS +37
  • Sisal EU325m 6NC1 FRN E +662.5, EU400m 7NC3 Fxd 7%
  • Macedonia EUR Benchmark 7Y 5.50% Area
  • 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.
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Source: BFW (Bloomberg First Word)

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