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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FINANCIALS
Considering the macro blockers to primary (central bank meetings, mainly), a very busy week for financials primary which highlighted strong investor appetite across the capital stack. Two big central bank credit surveys were out which were (marginally) positive and 1Q24 reporting has kicked off with JPMorgan and Citigroup.
- Primary: a very busy week in financials primary with tight spreads, good post-issue performance and solid demand (see graphic).
- New issue concessions: fair value is, obviously, subjective but, on our FVs, there’s been limited NIC this week (BBG NICs aren’t out yet in most cases) with an average of just 2.9bp. Atradius’s T2 was the high (+10bp) but a range priced through our valuation. Demand is still, evidently, strong.
- Performance since has been, aside from one case, positive. CMZB’s issue is a couple of basis points wider but, for investors in the remainder, it’s been a good week with average uplifts of 4.2bp.
- Volume: a relatively heavy week (we’ll have full stats in tomorrow’s weekly) yet cover remained strong at 2.3x average with some real highpoints amongst the subordinated issues. Another reflection of strong demand.
- Central bank credit barometers: ECB bank lending survey was out on Tuesday, showing marginally improving credit supply (home lending better, consumer credit less so) but still weak loan demand from both corporate and personal sectors. Germany appeared a significant laggard.
This was followed on Thursday by the BoE’s credit conditions survey; this appeared positive from a banks’ perspective with better demand and the key default stats look better than expected. This should be taken positively for financials spreads but leaves an obvious question for the rate of BoE rate cuts from here. - Idiosyncratic risk: the Swiss Federal Council’s long-awaited report on UBS-CS was out on Thursday outlining future changes to the regulatory regime. This appears likely to require higher capital levels for the bank which we take as being a negative for equity holders banking on the share buyback but a positive for credit investors who’ll see relative risk fall. However, the measures could be years before being fully phased in.
- Breaking news: US bank reporting has kicked off with JPM disappointing equity investors on weaker forward guidance than was hoped for. Citigroup was ahead of estimates, but credit quality is continuing to deteriorate, albeit with some offset for investors from a more positive outlook statement. Next week we have Goldman, Morgan Stanley and Bank of America.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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