HALISTER1: EU CREDIT DAILY: Risk/Reward Focus, EON Posts Loss, BAWAG Rises

EU CREDIT DAILY: Risk/Reward Focus, EON Posts Loss, BAWAG Rises

(Bloomberg) -- With bund yields negative out to 10y and EUR IG Corp index yield now a rarefied 0.455%, risk/reward considerations may soon begin to grow, Bloomberg strategist Simon Ballard writes.
  • Govt bond yields plumbing new lows creates a paradox for risk asset investors; an anemic macro backdrop might favor a defensive investment bias, while the prospect of continued loose monetary policy encourages a persistent hunt for yield
    • In the wake of the BOE’s latest stimulus initiatives, the bid for incremental yield remains the mkt theme
  • Asia credit mkts stronger again overnight hint at continued tightening bias in credit spreads at the open this morning
  • CDX IG closed +0.4bps at 71.22 in overnight session; iTraxx Asia Ex Japan IG currently +0.3bps at 114.26 and iTraxx Australia quoted -0.2bps at 103.25
NEWS
  • Corporate News
  • EON Posts Loss of 3 Billion Euros on Power-Plant Writedowns
  • G4S Says Continuing Businesses Posted Very Strong 1H Rev. Growth
  • Fuji Reports 1st Qtr Group Earnings Result
  • Lanxess 2Q In Line, DZ Bank Says, Raises FY Estimates on Outlook
  • OMV 2Q Clean CCS Net, Ebit Beat Ests.; Sees ’17 Cost Cuts Sooner
  • Adecco Quarterly Profit Beats Estimates as France Improves
  • Hapag-Lloyd Sees FY Ebitda, Ebit Down Significantly
  • Renault’s Sevenfold Surge Extends India Auto Sales Growth Run
  • Financial News
  • Dexia Posts 2Q Net Loss of EU145m; CET1 Ratio Rises to 15.0%
  • Commonwealth Bank Says 2H Conditions Tougher Than First Half
  • Ageas 2Q Profit Meets Ests. as Gains Offset Weak Combined Ratio
  • Bawag 2Q Net Income Rises 4% to EU101.2m as Revenue Grows
  • Italian Banks Reel But Monti Has No Regrets for Avoiding Bailout
  • Credit Rating News
  • Fitch Affirms ORIX’s Rating at ’A-’; Outlook Stable
  • China Bank Bailout Looming on Bad-Loan Losses, Fitch’s BMI Says
  • Singapore Banks to Record Modest Increase in NPL Ratios: Fitch
  • Other News
  • BOE Can’t Part Investors From Long Bonds as QE Hits Snag
  • Pimco Total Return Boosts Treasuries Stake to Most in 25 Months
ANALYST VIEWS
  • Ultra-low rates and intensifying scarcity issues among govies have long been among the arguments why investors are crowded out into the credit space and riskier assets: Commerzbank
NEW ISSUES
  • Helaba $600m 4Y Covered Bond MS +50
  • BP Capital Markets GBP650m 7Y UKT +85
  • 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)

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