Halister News

(Bloomberg) -- Risk assets quickly recovered any early weakness following the Italian referendum, and the primary market is likely to reopen with corporates in the mix, writes Bloomberg strategist Simon Ballard.

• While Italian risk looks set to remain under some pressure, the broader tightening trend has resumed
• It’s likely the ECB backstop is reassuring investors and limiting downside risk to corporate bond prices; the central bank bought another ~EU1.92 of bonds last week
• However, continued weakness in government bonds and a steady rise in yields is quietly eroding the total return profiles of risk assets
• A further sell off in rates could damp investors’ risk appetite; fuel demand for more defensive assets such as government bonds going into the traditional January spike in corporate new issues
• In terms of primary activity today, there are possible transactions to come from AusNet Services and Zimmer Biomet

• European IG credit pipeline here, leveraged finance pipeline here

• Bloomberg Barclays Eur-Agg Corporate index closed Monday at 126bps (-1bp); Bloomberg Barclays Eur HY index closed at 414bps (-4bps)
• CDX IG closed Monday at 72.17 (-0.7bp); iTraxx Asia Ex Japan IG is currently -0.6bps at 124.38 and iTraxx Australia quoted -0.7bps at 108.21

NEWS

• Corporate News
• Wolseley 1Q LFL Revenue Growth 1.8%; Sees FY Profit In Line
• Nissan Note Outsells Prius in Japan for No. 1 Spot in November
• Ashtead 2Q Adj EPS 31.8p; Sees FY Results Ahead of Its Forecasts
• Drax FY Ebitda Seen at Bottom of Range of Forecasts; Buys Opus
• Telecom Plus Sells Stake in Opus Energy Group for GBP71m
• OSG Corp Reports 9-Month Group Earnings Results
• Toyota Shrinking Hybrid Systems to Supply Other Carmakers

• Financial News
• ABN Amro to Sell $20 Billion of Private Banking Assets to LGT
• Nordea to Add to $9 Billion Synthetic Deal Using Similar Terms
• Paschi Completes Debt Swap as Recapitalization Plan Teeters
• Paschi Executives to Meet ECB on Capital Plan Today: Il Sole

• Rating News
• Moody’s Confirms Sanral Credit Ratings, Assigns Negative Outlook
• QTS Realty Raised to B1 from B2 by Moody’s on Sound Performance
• Starwood Property Upgraded to Ba2 by Moody’s; Outlook Stable
• S&PGR Affirms Christchurch Council ’A+/A-1’ Rtgs; Otlk Stable
• S&PGR Upgrades MyState Bank Ltd. To ’BBB+’; Outlook Negative

• Other News
• HSBC Lashed Out When VP Flagged Sex Harassment, Jury Told
• ECB Haunted by Ghost of Christmas Past as Stimulus Choice Nears
• SoftBank’s Son Said to Plan Meeting With Trump in New York

ANALYST VIEWS

• “The signs are ominous that we are unlikely going to see much (new issue volume) now, save for the odd borrower in IG, while we can expect a higher level from HY if market volatility stays low, given the number of deals in the pipeline. We’re going to tick over into the end of next week. Then close”: creditmarketdaily.com

• 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.