The positive tone on the credit markets continued last week. iTraxx Main tightened 12bp to 92.5bp, while iTraxx Crossover tightened 54bp to 374bp.In the Nordic region we saw issuance from Norway's largest retailer NorgesGruppen with a 6-year NOK500m senior unsecured printing at 3M NIBOR+150bp. Danske Bank issued a 5-year EUR1bn covered bond printing at Mid swap+16bp.
In Europe Daimler brought its second triple tranche euro bond of the year to market, a total of EUR3.5bn, floating and fixed rate due 2018, 2019 and 2026 printing at 3M Euribor+48bp, Mid swap+70bp and Mid swap+105 bp, respectively. With an order book size of approximately EUR7bn, demand far exceeded supply.
The main event this week is the ECB meeting on Thursday with the rate decision. We expect the ECB to cut the deposit rate by 10bp to -0.4%, to introduce a two-tier deposit rate system aimed at reducing the cost to the banking sector and signaling that the deposit rate can go even lower.
On Tuesday last week the Swedish Financial Supervisory Authority (SE FSA) announced its long-awaited review of the bigger banks' risk weights for corporate exposures. We discuss how this affect Swedish banks.
This week we present a new trade idea on Nynas AB's June 2018 Quarterly Stibor+750bp SEK bond, which appears attractively priced considering Nynas's turnaround seems anchored after several strong reports.
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