Halister News

(To subscribe to EU Credit Daily, click here and set alert by clicking ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- Thursday’s mixed picture in global equities seems to be a fair characterization of generic sentiment across risk assets. Credit spreads may look appealing after recent selloff and some investors may deem this a buying opportunity, but such is the overhang of uncertainty over global growth and rates, that many others prefer a defensive position for now, Bloomberg strategist Simon Ballard writes.

• The mkt has rallied back a long way though from flirting with the 500 lvl on iTraxx Crossover just a week ago; cash bonds have also performed strongly, with EUR HY OAS gapping in >30bps, albeit with traders still bemoaning a lack of secondary mkt liquidity
  • Speed and magnitude of recent recovery may be another reason to doubt the sustainability of these tighter lvls, in absence of meaningful improvement in underlying fundamentals
• GBP credit mkt may be susceptible to headline risk today as EU leaders’ summit concludes in Brussels; Brexit risk has fueled YTD underperformance of GBP IG credit relative to EUR IG

• Risk Appetite model highlights degree to which mkt pricing has strengthened, but with higher associated volatility
• CDX IG is currently +0.6bps at 116.62 in overnight session; iTraxx Asia Ex Japan IG is currently +0.2bps at 162.30

NEWS

• Corporate News
• Aegon Fourth-Quarter Profit Gains 20% on Investment-Income Rise
• Apple Reports Full-Year Group Earnings Results
• China Coal Miner Defaults on Convertible Debt as Prices Sink
• Coca-Cola HBC 2015 Rev., Comparable Ebit Beat Ests.

• Financial News
• Allianz Says Fourth-Quarter Profit Rises, Misses Estimates
• Dexia Gets Capital Requirement of 8.625% From ECB; CET1 at 15.9%
• Standard Life 2015 Operating Pretax From Cont Ops Rises 9.4%
• Wall Street Banks Gorge on Treasuries and That’s a Warning Sign
• Top Chinese Banks Have Long Way to Go With Asian Expansions
• EFG Confirms Talks With BTG Pactual on Potential BSI Purchase

• Rating News
• India Bank Credit Profiles at Risk Without More Capital: Fitch
• New Singapore Telco Will Have Few Cost Advantages: Fitch
• S&P Affirms Cook Islands Rtgs At ’B+/B’, Otlk Stays Stable

• Other News
• Williams Sees Gradual Rate Rises as Economy Faces Headwinds
• EU Anti-‘Brexit’ Deal Goes to Wire as Cameron Meets Resistance
• Oil Trades Below $31 as Rising U.S. Crude Stockpiles Expand Glut

ANALYST VIEWS

• Equity markets seem to be taking cues from the selloff in credit, creating a staring match that could in itself worsen consumer sentiment and, in turn, dent economic growth: Barclays
• Low yields and returns, corporate cost cutting, pressure on corporate earnings, weaker investment/capex levels and increased potential for greater event risk -- we’re caught in a trap: creditmarketdaily.com
• Over the past week, investors maintained their preference for U.S.-related bonds (latest: US$5.9bn, seventh week of inflow) over non U.S.-related bonds geographically; they continued to acquire treasuries (US$1.6bn, seventh week of inflow) and (we’re) sidelined from high yield (-US$593mn, seventh week of withdrawal) and corporate bonds (-US$536mn): Jefferies

NEW ISSUES

• Amgen EU1.25b 6Y MS +110, EU750m 10Y MS +143
• State of Berlin EU250m 0.5% 2/2025 Tap MS -3
• DG Hyp EU500m Long 6Y Covered MS -2
• KfW GBP150m 1.125% 12/2019 Tap UKT +40
• Macquarie Bank EU500m 5Y Covered MS +40
• Roche Finance Europe EU650m 7Y MS +32
• Thames Water GBP300m 12Y Senior Secured UKT +190
• 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.