Halister News

(Bloomberg) -- Credit markets look set to open with a renewed bid again today, albeit modest with investor sentiment still fragile. The tone to risk assets has markedly weakened this week amid uncertainty surrounding Deutsche Bank’s capital position and three primary deals being pulled, but there has been no investor capitulation in secondary cash bonds, Bloomberg strategist Simon Ballard writes.

• Speculation ahead of OPEC meeting in Algiers feeding weakness in the oil price; put pressure on Asian equities overnight
• Defensive tone characterizes corp credit as investors balance on-going hunt for yield with security of capital preservation
  • New issue pricing now finely nuanced; need for lower- grade issuers to be realistic in funding targets
• Risk Appetite Model reflects recent weakening of tone to risk assets
• Bloomberg Barclays Eur-Agg Corporate index closed yday at 114bps (+2bps); Bloomberg Barclays Eur HY index closed at 418bps (+7bps)
• CDX IG closed +0.6bps at 77.44 in overnight session; iTraxx Asia Ex Japan IG currently -4.9bps at 115.31 and iTraxx Australia quoted -0.1bps at 104.79

NEWS

• Corporate News
• Moss Bros 1H Pretax Profit Up; Sees Further Good Progress in 2H
• Toshiba More Than Doubles Profit Outlook as Yen Drives Sales
• AA 1H Revenue Up 2.2%, Is Trading in Line With Expectations
• Sainsbury 2Q LFL Retail Sales Ex-Fuel Below Expected
• Smiths Group Sees Broad Continuation of 2016 Trends in Outlook
• Deutsche Post Agrees to Buy U.K. Mail for for GBP242.7m

• Financial News
• European Banks Hit as Deutsche Bank Troubles Spook Investors
• Deutsche’s Challenges Not New, Should Settle DOJ Fast: Goldman
• RBS Reaches $1.1 Billion Settlement With U.S. Credit Unions Over Mortgage-Backed Securities
• Deutsche Bank’s Cryan rules out capital increase: Bild

• Credit Rating News
• S&PGR Assigns Prelim ’BBB-’ Rtgs To UPL Corp, Notes; Otlk Stbl

• Other News
• Saudi Oil Minister Signals He’s Open to Compromise With Iran
• Wells Fargo’s CEO Forfeits $41 Million in Fight to Keep His Job
• Not Enough Money and Too Many Funds Mean ETFs Sputter in Europe

ANALYST VIEWS

• There is rarely any smoke without fire, but we don’t believe the demise of Deutsche Bank is imminent. They might need more capital - lots of it, but they’re big enough and tough enough to handle it: creditmarketdaily.com

NEW ISSUES

• Babcock International GBP250m 10Y UKT +130
• Blackstone Holdings Finance EU600m 10Y MS +83
• Dexia Credit Local GBP500m 5Y UKT +75
• NWB Bank EU500m 25Y MS +10
• Stadshypotek EU500m 10Y Covered MS Flat
• Unedic EU500m 11/2020 FRTR +13
• Vodafone EU750m 1/2024 MS +60
• 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.