Halister News

(Bloomberg) -- Most of the upside assumption to the ECB CSPP seems to have been priced in, given the muted credit market reaction to yesterday’s announcement that bond-buying will start on June 8. Corporate debt demand/supply dynamics look firm as June commences, Bloomberg strategist Simon Ballard writes.

• Fed has potential to disrupt market at its June 15 rate decision; with Fed funds futures pricing only a 22% probability of a rate increase, risk-asset repricing could prove violent if the FOMC does hike
  • U.K.’s June 23 EU referendum a possible multi-standard deviation event for risk markets
• Expect quiet session in Europe this morning ahead of U.S. May payrolls report later; consensus looking for 160k gain
  • Asian risk markets firmer overnight, suggesting European credit should remain underpinned at the open
• Risk Appetite model firm post ECB announcement of CSPP start date

• CDX IG closed -0.3bps at 77.27 in overnight session; iTraxx Asia Ex Japan IG currently -0.2bps at 141.84

NEWS

• Corporate News
• Huawei Draws From Apple Playbook to Narrow IPhone’s Lead
• Court Orders Woolworths Pay A$9m Penalty in Detergent Case
• Wal-Mart to Start Testing Grocery Delivery Through Uber, Lyft
• SoftBank Cutting Its $109 Billion Debt Leaves Funds Wary of Son
• Noble Group Bonds Surge by Record After $500 Million Cash Call

• Financial News
• Brexit Alarm Has Bank Watchdog in Sweden Demanding Action Plans
• Nomura AM to Close MMF in Aug., Cites BOJ Neg.-Rate Policy
• Bank Indonesia to Issue Looser Lending Rules in 3Q at the Latest

• Credit Rating News
• Australia’s Mirvac Gets Moody’s Credit Rating for First Time

• Other News
• Euro Catches Severe Case of ECB Apathy as Fed, Brexit Take Stage
• China Toxic Debt Solution Has One Big Problem as Banks Buy NPLs
• U.S. Yield at 16-Year High Versus U.K. Before Jobs, Brexit Vote
• Australia Buys Back Record A$9.3 Billion of 2017 Bonds
• Top Fund Says China Junk Bond Yield to Rise Further on Defaults

ANALYST VIEWS

• Ability to service debt is the best it has ever been. It doesn’t matter that we’re going to be buying more negative- yielding bonds soon enough; makes sense if holding cash can cost 40bps-100bps, but won’t when the market turns: creditmarketdaily.com

NEW ISSUES

• Bonum Bank EU100m 3Y FRN 6mE +100
• Commerzbank EU500m 10Y Covered MS -3
• Banco de Sabadell EU1b 8Y Covered MS +40
• 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.