Danske Daily: November 8, 2013

Headlines:
Stability in credit spreads continues. New issuance activity edges higher. Government proposal eliminates refinancing risk for Danish ARM bonds.

Market commentary
Spreads are marginally tighter this week, on the back of good macro data out of the US and a dovish ECB, which reduced the interest rate by 25bp. The good tone has been partially impaired by France’s sovereign rating being downgraded from ‘AA+’ to ‘AA’ and by renewed tapering fears in the US on the back of strong GDP numbers yesterday. Subsequently, both the iTraxx main (investment grade index) and iTraxx Xover (high yield index) have tightened by one basis point over the week.

We have seen several Q3 13 reports from the Nordic corporate market. These were generally positive from a credit perspective, with YIT, Talvivaara and Nykredit the exceptions. On a broader scale, the reporting season in developed markets has been solid so far. In the US, 54% and 74% of reported Q3 sales and earnings, respectively, from companies in the S&P500 index have been stronger than expected. In Europe, performances have been less strong, with only 35% and 53% of reported Q3 sales and earnings, respectively, from companies in the Bloomberg EU 500 index being stronger than market expectations.

New issuance activity edges higher
Primary market activity continues last week’s strong trend, benefiting from generally high risk appetite in the market. Belgian chemicals manufacturer Solvay kept the corporate hybrid market alive with a dual tranche 1.2bn issue. Activity in the Nordic region is also picking up with local currency issues by Akelius Fastigheter and Oslo Kommune. Finnish telecom operator DNA announced its possible interest in a deal after a series of investor meetings.

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