Financials: Credit Wider After Strong Performance, Issuance

Financials lunchtime wrap – after a run of broadly positive spread moves, IG financials are leading the charge wider today (senior +0.8bp, sub +1.0bp, market +0.5bp).

• Typically, the high beta names are being hit (DePfa, PKO, property financials) but also Barclays (index members: +3bp) as yesterday’s CEO comments on pushing further with rollout of an expanded investment bank are being digested. This shouldn’t be a surprise; the CEO’s strategy was outlined at results (20-Feb) but the credit stack has broadly tightened over the last month so this could simply be a pause for breath.
• Per our earlier comment on Japan, we do note MUFG (+2bp), SMFG (+2bp) and Mizuho (+2bp) are all wider.
• In the HY index, senior (+4.7bp) and sub (+2.5bp) financials are 2^nd and 4^th weakest performers, respectively. The former is largely skewed by Intrum and Heimstaden. The latter is DePfa (+78bp!) but with a range of Southern European banks (BPM, Sabadell, Novo, Alpha, BP Sondrio) all 3bp wider, or more. There’s little news amongst these banks but a reasonable amount of primary going on amongst higher beta issuers this morning.