HALISTER1: EU CREDIT DAILY: Risk-On Despite IMF Warning; Tesco, JPMorgan

EU CREDIT DAILY: Risk-On Despite IMF Warning; Tesco, JPMorgan

(Bloomberg) -- Risk-on sentiment continues to characterize the European credit space, but corporate price action remains intrinsically susceptible to swings in the macroeconomic outlook, Bloomberg strategist Simon Ballard writes.
  • Strong China trade data and rallying Asian equities overnight suggest a firm European session for risk
    • Oil above $40/bbl on global growth optimism supportive of credit spreads and risk appetite even as IMF warns that Brexit could cause “severe regional and global damage”
  • Primary market clear reflection of buoyancy in sentiment; EU19.5b week to date, EU443.98b YTD
    • But EUR YTD issuance -6.3% vs same period 2015
  • Recent performance of Risk Appetite model highlights resilience of corporate credit, supported by ongoing bid for yield
  • CDX IG currently -0.6bps at 79.56 in overnight session; iTraxx Asia Ex Japan IG is currently -2.5bps at 141.85
NEWS
  • Corporate News
  • WH Smith 1H Headline Pretax Profit In Line With Estimate
  • Tesco Sees Improvement in Profitability in Current Yr
  • De La Rue Sees Higher FY Operating Profit Than Expected
  • BP Reaps Russia Rewards, Earning 22% of Profit From Rosneft
  • China Steelmaker Misses 3rd Bond Payment as Defaults Spread
  • Toyota Recalls About 340,000 Vehicles in Japan Over Two Defects
  • RWE Sees U.K. Profit Recovering as It Seeks to Win Back Clients
  • Financial News
  • JPMorgan Said to Trim 5% of Jobs at Asia-Pacific Wealth Unit
  • Natixis APAC Head of Debt Platform Selvanathan Says Has Resigned
  • Deutsche Bank Said to Hire Citi’s Boyle to Help Lead Derivatives
  • Credit Rating News
  • Nomura Overseas Restructuring Is Credit Positive, Moody’s Says
  • Other News
  • Spain Said to Reduce Bond Sales Amid Drop in Net Issuance
  • ECB Sees Italy Bank Rescue Fund Favorably: Padoan in Sole
  • Basel Bites Again as Rules Push Aussie Banks Toward Longer Bonds
  • Five Lessons From Japan’s Negative Rates: Mohamed A. El- Erian
ANALYST VIEWS
  • The European corporate credit bond market has become very technical. While we are not quite doing away with the notion of risk anymore, the market is certainly behaving (or believing) that “the risks” are remote: creditmarketdaily.com
NEW ISSUES
  • BMO EU1.5b 5Y Covered MS +14
  • Alternatifbank $300m 10NC5 Tier 2 Notes to Yield 9%
  • Gas Natural Fenosa Finance EU600m 10Y MS +75
  • Deutsche Telekom EU500m 5Y MS +35
  • Linde Finance EU750m 12Y MS +40
  • FMO $500m 3Y FRN 3mL +32
  • State of Berlin EU250m 0.625% 3/2026 Tap MS -3
  • 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.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
JPM US (JPMorgan Chase & Co)
TSCO LN (Tesco PLC)

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