Weekly Review

Market News

Our markets remain relatively resilient in the face of renewed speculation around trade wars, the latest rhetoric from president Trump, fresh debate on Brexit and concern about Italy’s economic agenda. With market participants mostly back from their summer holidays, there has been an uptick in activity and a number of new issues too. Demand for these new issues, and for securities in the secondary market, set a more positive tone for the beginning of September.

New Issues

Rabobank:  new AT1:  EUR 1 billion 4.625% non call 7.25 years. The book was EUR 4.75 billion and we were allocated nearly half of what we asked for which was a pleasing outcome.

Credit Suisse:   new AT1:  USD 1.5 billion 7.25% non call 7 years (USD 8 billion book built). We received 30% of the interest we showed – these were attractive levels both in relative terms (400bp and 440bp respectively) and absolute terms (very attractive cumulative coupon income).

Results

Results from the Dutch insurance company ASR and the Dutch bank NIBC were good and in line with expectations.

Groupama:   strong results; premium income improved by 3.6% via growth from all segments; profitable with net income of EUR 206 million; solvency ratio of 167%/298% (excluding/including transitional measures).

Focus

Just Group – where we hold 5bp in EUR and 22bp in GBP (none in USD) – announced strong 18H1 results. This was an example of where news for bond holders is not always the same as news for shareholders. From a credit point of view: strong operational growth, backed by favourable market trends, saw metrics improve. However, uncertainty regarding a regulatory review about the treatment of lifetime mortgages (to be published in September) led the group to defer their interim dividend. We continue to like the credit and believe that Just Group has enough options to counterbalance the impact from the expected new regulation. The share price was off 4%, while the bond price was stable.

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10 september 2018

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