Market News European Morning Credit Mail
by Jeremy Spain
Global equity markets had a subdued session on Monday, despite the
Dow and S&P managing to chisel out very mild gains, most indices closed
in negative territory. Weighing on sentiment were fears the Chinese
government would ramp up its monetary tightening efforts and Moody's
report on sovereign debt levels.
Some investors returned to the equity market late on after
moderately better-than-expected US industrial production figures and
unveiling of Senator Chris Dodd's new regulatory overhaul plan for Wall
Street, which did not include some of the most restrictive measures that
some traders had factored into share prices over recent weeks.
CDS spreads on both sides of the Atlantic saw some widening, failing
to react to the late rally in the equity markets, in Europe the
benchmark iTraxx Xover index closed around 8 bps wider at the 423 bps
level.
As for this morning, equity markets in China's are in positive
territory which has helped sentiment somewhat, European stocks look set
to trade up early on, although the Xover index is currently trading
around unchanged as traders remain cautious ahead of the results of the
Fed meeting tonight and the Bank of Japan's policy meeting which also
starts later today.
Elsewhere, 10 year government bond spreads for Greece over bunds
are currently around 2 bps tighter at the 288 bps level, after the
eurozone governments declared last night that they stood ready to help
the country tackle its debt crisis, although stopped short of promising
any specific loan amounts, saying that any help would likely be based on
bilateral loans.
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CORPORATE HEADLINES
FINANCIALS
-- RBS is restructuring its balance sheet to boost its capital strength
and its standing with bond investors. This could involve at least
Stg10bln of its S28 bln debt bought back at a premium to current
prices-FT.
AUTO
-- Renault has been unable to resolve differences in valuation with
Daimler on a share swap that would have brought Daimler into the
Renault-Nissan alliance.-Bbg
-- Daimler and Reanult are in discussions to acquire mutual equity
stakes as part of a possible allaince that would go beyond their
current talks on small cars - FT.
-- Close Brothers has reported a first-half operating profit before tax
of Stg62.3 mln versus Stg41.5 mln last year.
TMT
-- Infineon Technologies may add more jobs at its Dresden plant to meet
rising demand.
-- U.S. computer maker Dell Inc. has filed a lawsuit against five
Japanese and Taiwan technology companies over allegations of plotting
to set prices and overcharging for the products they make.-WSJ
CONSUMER
-- Debenhams has released a first half trading report, saying that
like-for-like sales increased by 0.3% over last year.
INDUSTRIALS
-- Airbus and Boeing have long split the market for big passenger jets,
but smaller rivals such as Bombardier and Embraer could start to
erode that dominance.-WSJ
BASIC MATERIALS
-- Rio Tinto and Aluminum Corp. of China are in advanced talks to
jointly develop the Simandou iron-ore project in the West African
nation of Guinea.-WSJ
-- Rio Tinto has said that its capital spending may be between $5-6
billion in 2010.
-- In a confrontation that has drawn comparisons with "Avatar," a local
tribe stands in the way of Vedanta's efforts to mine bauxite buried
in the eastern Indian state of Orissa.-WSJ
-- Xstrata has had the outlook on its Baa2 senior debt ratings revised
to "stable" from "negative" by Moody's.
OTHER
-- Euro-zone finance ministers Monday took steps toward drawing up plans
for a possible Greek bailout, but they stopped short of agreeing to
make one available, insisting they see no need for troubled Greece to
receive any assistance.-WSJ
-- Lending to the commercial property sector has thawed over the past
year, with more banks providing additional debt for investment and
development for the first time since the crash in 2007, according to
a report from Savills - FT.
-- Alistar Darling and the Labour government have failed to announce a
"sufficiently ambitious" plan to cut the budget deficit, the European
Commission is poised to conclude tomorrow - FT.
-- Ernst & Young is to face questioning from the UK's audit watchdog
over how it accounted for some of the transactions carried out by
Lehman Brothers to boost the presentation of its balance sheet in
London - FT.
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EURO SUPPLY PIPELINE: Mar. 16
FINANCIALS
* Banco Popolare Espanol - Has hired RBS and UBS to run a covered bond
program on its behalf, according to sources.
* VEB - Is to issue an inaugural deal in Euros. Leads are Barclays,
Citigroup, HSBC and SocGen.
* LF Hypotek - Is to issue a benchmark, covered deal in Euros. Leads are
Credit Suisse, Danske Bank, Deutsche Bank and RBS.
* NIBC Bank - Is to issue a benchmark, covered deal in Euros. The deal
will be launched following investor presentations and the leads are
Credit Agricole, Credit Suisse and NIBC.
* Aareal Bank - Is to issue a benchmark, 4 year deal in Euros. Leads are
Bayerische Landesbank, Commerzbank, Deutsche Bank and DZ Bank.
CORPORATES
* Go-Ahead Group - Stg deal, currently roadshowing. Leads will be RBS
and Barclays.
* Abengoa - Is rumoured to be considering issuing a deal in Euros, at
some time in the near future. Leads are mooted to be BNPP, Deutsche
Bank, Calyon, Credit Suisse, Banco Santander and SocGen.
* Vestas - Has hired Nordea, Rabobank, SocGen and UniCredit to arrange a
European roadshow starting this week.
* Italcementi - Is to issue a benchmark deal in Euros. The deal will
launched following investor presentations and the leads are Banca IMI,
BoA-ML, BNPP and SocGen.
* Vale SA - Has announced this morning that it plans to offer
Euro-denominated notes in the global capital markets. The company will
use the net proceeds of this offering for general corporate purposes.
OTHERS
* Madrid - is to issue a benchmark, 10 year fixed rate deal in Euros.
Price talk is in the mid-market swaps plus 130 bps area and the leads
are Caja Madrid, HSBC and Credit Agricole.
* The state of North Rhine-Westphalia - Is to issue a E250 million, 5
year FRN deal. Price talk is in the Euribor plus 15 bps area and the
sole lead is DZ Bank.
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MACRO EVENT RISK AND SPEAKERS
UK data sees the 0930GMT release of the DCLG House Price Index.
The EMU Feb final HICP data is due at 1000GMT and is expected to confirm
the preliminary estimate of +0.9% y/y, while the German ZEW survey for
March is also due at 1000GMT.
The ZEW's Economic Sentiment Index (ESI) fell for a fifth successive
month in February, dropping by 2.1 points to stand at +45.1, its lowest
level since July 2009. Nevertheless, it remains well above its
historical average of +27.1. Meanwhile, the counterpart current
conditions indicator posted a ninth successive rise in February,
rising by 1.8 points to -54.8, its highest level since November 2008.
For March, the ESI is expected to see a further fall to 43.6, while the
current conditions indicator is expected to see its tenth successive
rise in March, to -52.0.
US data starts at 1145GMT with the weekly ICSC-Goldman Store Sales data.
The main US releases are at 1230GMT, when we get the Import, Export
Price Index along with Housing Starts & Building Permits. The pace of
housing starts is expected to decrease to a 565,000 annual rate in
February after posting a modest gain in January.
The weekly Redbook Average then follows, at 1455GMT.
Back in Europe at 1445GMT, ECB Executive Board member Juergen Stark
delivers a speech at the European Parliament.
The FOMC decision is due at 1815GMT and focus is on whether or not the
central bank removes "for an extended period" from the statement
accompanying its rate decision.
Market News International's Steve Beckner warned not to expect too
much from the Fed. "At some point, the FOMC will no doubt signal an
impending policy shift by changing key language in its policy
statement," he said "But there is no indication that most members are
yet ready to abandon the assertion that 'economic conditions, including
low rates of resource utilization, subdued inflation trends, and stable
inflation expectations, are likely to warrant exceptionally low levels
of the federal funds rate for an extended period,'". In the current
economic environment, the Fed seems likely to maintain the "policy
status quo," Beckner added. .
Late events include the Bank of England's Bean delivering a speech in
London at 1900GMT, while late US data sees the 2100GMT release of
the weekly ABC News Survey.