Halister News

(Bloomberg) -- Expectations the Fed will leave U.S. rates unchanged this week, coupled with the latest CSPP data showing another aggressive weekly buying spree from the ECB is helping ratchet European cash corporate bond spreads tighter for now, Bloomberg strategist Simon Ballard writes.

• Sentiment may be fragile, but the medium-term path of least resistance for corp bond valuations seems to remain tighter
  • Risk assets susceptible to any surprise Fed rate hike tomorrow; any consequent rise in real bond yields, implicit tightening of financial conditions, could have potentially negative impact on credit markets
• Beware optical widening in iTraxx indexes this morning due to roll from S25 to S26; Main ~+7bps, Xover ~+13bps

• Risk Appetite Model Holding Steady Ahead Of Fed And BOJ
• Bloomberg Barclays Eur-Agg Corporate index closed yday at 111bps (unchanged); Bloomberg Barclays Eur HY index closed at 411bps (-1bps)
• CDX IG closed -0.01bps at 77.14 in overnight session; iTraxx Asia Ex Japan IG currently +7.9bps at 119.91 and iTraxx Australia quoted -0.2bps at 98.17

NEWS

• Corporate News
• Bayer Raises Peak Sales Forecast for Portfolio of New Medicines
• Kingfisher 1H Retail Profit Beats Ests.
• Pennon Says On Track to Meet Forecasts, Earnings Driven by ERFs
• Canada Auto Union in Tentative Agreement With General Motors
• EDF Extends Halt of Cruas-3 French Reactor to Oct. 6

• Financial News
• IG Group 1Q Revenue Rises 5.1%; Says Quarter Was Challenging
• China’s Biggest Banks Quicken Pace of Bad-Loan Security Sales
• Danske Says ‘Full London’ Isn’t Goal in Capital Markets Overhaul
• Deutsche Asset Mgmt Clients Withdrew EU20b in 1H
• ‘Deeply Sorry’ Stumpf Says Wells Fargo Too Slow to Tackle Abuses

• Credit Rating News
• S&PGR Downgrades Insurance Entities Of Australian Major Banks
• S&PGR Downgrades State of Rio de Janeiro To ‘SD’

• Other News
• Two of Fed’s Own Primary Dealers Warn Shock Hike Awaits Markets
• Yellen Must Brace for More Political Attacks If Hike Is Delayed

ANALYST VIEWS

• There’s just no dimming appetite for corporate bond risk, with the ECB doing some heavy lifting. The HY sector has roadshows/deals on the go for this week, and FIG issuance looks to be picking up, too: creditmarketdaily.com

NEW ISSUES

• Berlin Hyp EU500m 7Y Green Bond MS +52
• Celanese US Holdings EU750m 7Y MS +110
• Koninklijke DSM EU750m 10Y MS +40
• Klepierre EU600m 15Y MS +60
• LBBW EU500m 10Y Tier 2 MS +255
• 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.