HALISTER1: EU CREDIT DAILY: U.K. Airports Eyed; Orange Rises, Paschi Loss

EU CREDIT DAILY: U.K. Airports Eyed; Orange Rises, Paschi Loss

(Bloomberg) -- Infrastructure sector may dominate U.K. investor focus Tuesday with government decision expected on South-east England airport expansion; Heathrow or Gatwick. Bonds of winning ‘bidder’ likely to see near-term positive reaction, Bloomberg strategist Simon Ballard writes.
  • Well-charged new issue pipeline expected to maintain primary market activity over the coming days; issuers may want to execute ahead of any market slowdown around U.S. election
    • Secondary market spreads remain well anchored; supported by low growth, low rate macro as well as reassurance of implied backstop bid from central banks’ QE
  • 3Q corporate earnings season reaching critical mass with credit market sentiment susceptible to variations in “surprise” headlines; Novartis, Syngenta, Orange among key reporters Tuesday
  • Risk Appetite Model shows risk remains anchored by macro outlook and QE backstop bid
  • Bloomberg Barclays Eur-Agg Corporate index closed yday at 110bps (-1bp); Bloomberg Barclays Eur HY index closed at 367bps (-3bp)
  • CDX IG closed -0.5bps at 73.80; iTraxx Asia Ex Japan IG is currently -0.6bps at 114.64 and iTraxx Australia quoted -0.4bps at 102.42
NEWS
  • Corporate News
  • Orange Earnings Rise 1.6% on Wireless Demand in Spain, Africa
  • Anglo American Platinum 3Q Production 1% Higher vs 3Q 2015
  • Whitbread 1H Adj Pretax Beats, Sees FY In Line With Expectations
  • Fortum 3Q Sales Beat Estimates; Profit a Miss
  • Neste 3Q Comparable Operating Profit Misses; Margin Falls Y/y
  • National Express Says Continues to Deliver Strong Growth
  • Severstal 3Q Ebitda Jumps 11% Q/q to $584m; Est. $566m
  • Saab 3Q Operating Profit Misses Estimates; Keeps 2016 Outlook
  • Novartis 3Q Sales of Entresto, Cosentyx Slightly Below Estimates
  • Norsk Hydro Underlying Ebit Beats; Maintains Global Demand View
  • Financial News
  • Paschi 3Q Net Loss EU1.15b After Loan Loss Provisions EU1.3b
  • Swedbank Beats Estimates as Third-Quarter Profit Jumps 23%
  • Julius Baer, DBS Said to Vie for ABN Amro’s Asia Wealth Arm
  • St James’s Place 3Q FUM Rises 31%; Net FUM Inflow Increases
  • Rating News
  • Chalco Outlook Revised to Stable by S&P; BBB- Rating Affirmed
  • AT&T May Keep Blue-Chip Status Despite Ratings Cut Warnings
  • Other News
  • Brexit Confronts U.K.’s Online Lenders With Biggest Test Yet
  • Fed Inclined to Raise Rates If Next President Pumps Up Budget
  • Euro Traders Start to Believe Lightning Won’t Strike Twice
ANALYST VIEWS
  • That level of (ECB) bond acquisition should solicit a much more aggressive tightening trend and the resistance to that happening has certainly flummoxed us. Still, we’re not going wider when other risk assets are selling off: creditmarketdaily.com
NEW ISSUES
  • Iren EU500m 8Y MS +80
  • Morgan Stanley EU2.75b 2-Part Fixed, FRN
  • NordLB EU750m 10Y Covered Bond MS -11
  • Rentenbank EU500m 20Y MS -16
  • SEB EU850m 12NC7 Tier 2 MS +135
  • 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.
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