Halister News

(Bloomberg) -- EUR cash corporate bonds continue to benefit from ECB CSPP structural support but Brexit concerns, recent pound weakness, ongoing speculation over the FOMC outlook and the latest increase in Middle Eastern geopolitical risk may all combine to undermine near-term risk asset sentiment, Bloomberg strategist Simon Ballard writes.

• Intensifying military aggression in Iraq and Syria could weaken risk assets’ demand/supply dynamics; trigger renewed volatility
• U.S. political debate and uncertainty also likely to be key focus point of (U.S.) investors over next 3 weeks in run-up to presidential election
  • Beyond (geo)politics, main drivers of risk asset price performance this week likely to be macro data (incl. U.K CPI) and corporate earnings releases (incl. BofAML, GS, Morgan Stanley)

• Risk Appetite Model shows spreads anchored even while GBP uncertainty lingers
• Bloomberg Barclays Eur-Agg Corporate index closed Friday at 112bps (-2bps); Bloomberg Barclays Eur HY index closed at 392bps (-8bps)
• CDX IG closed Friday -0.5bps at 75.62; iTraxx Asia Ex Japan IG currently +0.4bps at 117.54 and iTraxx Australia quoted +0.8bps at 104.75

NEWS

• Corporate News
• Pearson Reiterates ’16 Outlook, EPS May Rise if FX Rate Persists
• Robert Walters 3Q Gross Profit Up 23%, Up 8% Constant FX
• VW Probe to Be Concluded by U.S. DOJ in 2016: Handelsblatt
• PSA Said to Cut 2,133 Jobs at French Sites, Franceinfo Says
• Apple Seeking Newer Screens to Make or Break Japan Suppliers
• Samsung Begins Mass Production of Mobile AP Using 10-Nano Tech

• Financial News
• Emirates NBD 3Q Net Misses Estimates; Islamic Unit Loss
• National Bank of Kuwait Third-Quarter Profit Climbs 6.4%
• Caixabank Reviews Strategic Plan 2015-18: El Confidencial
• Saudi Bank Stress Builds as Kingdom’s Cash Injection Falls Short

• Credit Rating News
• Dallas, Texas Cut to Aa3 by Moody’s, May be Cut Further
• S&PGR: Large GCC GREs With Big Mandates Are Better Positioned
• Fitch Publishes First-Time Rating ‘BB’ to Credit Union Baywide
• Moody’s assigns Aa2 rating to KNOC’s MTN drawdown

• Other News
• Trump Tries to Change It Up as Polls Show Growing Women Problem
• Pound Will Cushion U.K. From Brexit Shock, BOE’s Broadbent Says
• Draghi Seen Embracing More Before Less QE as Inflation Edges Up

ANALYST VIEWS

• The BoE might be on a mission to lift £60bn of Gilts through its QE programme, but there seems to be plenty of sellers (and more) happy to offload their holdings. The side story is the impact it will have on corporate bond returns, which will be heading into single digit territory soon enough having been as high at 17.2% at the end of August. Oops: creditmarketdaily.com

NEW ISSUES

• Bank Gospodarstwa Krajowego EU200m 2026 Tap MS +90
• L-Bank $550m 10/2017 Reg S FRN Tap 3mL +8
• 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.