Halister News

(Bloomberg) -- The increased depth of the technical bid for credit risk, created by the ECB, suggests a still-robust outlook for corporate bonds, Bloomberg strategist Simon Ballard writes. We may see some profit-taking in the coming days following the risk rally late last week, and as focus turns to FOMC, but positive sentiment should persist overall.

• Cash bonds are cheap relative to underlying synthetic CDS mkts and the ECB bid for EUR-IG non-bank corporate debt should see liquidity and spreads chased tighter
  • With liquidity already low in many areas of the corporate bond space, BBB non-financial companies may be focal point for ECB buying, but expect spreads across the rating spectrum to ratchet tighter
  • Momentum may also be buoyed by recent short-sellers now scrambling to cover positions, as well as fact that penal (negative) rates on cash holdings should encourage near-term risk-taking
• ECB has sparked decline in spread dispersion but rise in volatility shown in Risk Appetite model

• CDX IG currently -2.5bps at 82.99 in overnight session; iTraxx Asia Ex Japan IG currently quoted -5.4bps at 135.84

NEWS

• Corporate News
• SSE Sells Stake in Clyde Wind Farm for GBP355m Consideration
• Fevertree FY Earnings Rise, Says Encouraging Start to 2016
• Telstra, San Miguel End Talks on Philippines Wireless JV
• Bashneft 4Q Net RU6.9b Falls 69% Q/q; Adj. Ebitda Also Declines
• China Vanke Surges Most in 16 Months on $9.2 Billion Deal

• Financial News
• Credit Agricole Tenders to Buy Up to EU4b Covered, Tier 2 Bonds
• Helvetia 2015 Underlying Profit Rises, Raises Dividend

• Rating News
• Fitch Affirms Wesfarmers Ltd at ’BBB+’; Outlook Stable
• Moody’s reviews KORES’ Aa2 ratings for downgrade
• S&P Takes Various Rtg Actions On 32 Classes Of 10 Japan RMBS

• Other News
• Morgan Stanley Says Bonds Set to Surge in 2016 Year of the Bull
• Bond Traders Can’t Sleep as Fed Policy Becomes a Foreign Affair
• Brent Swings Near $40 as Falling U.S. Rigs Counter Iran Output

ANALYST VIEWS

• We have a marginal buyer with the deepest pockets of all. All roads lead to a tightening in spreads everywhere: creditmarketdaily.com

NEW ISSUES

• AP Moeller-Maersk EU500m 3Y FRN 3mE +160; EU1b 5Y MS +180
• Valeo EU600m 10Y bonds MS +110
• Intesa Sanpaolo EU1.25b 7Y covered MS +45
• 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.