TECHNOLOGY: TMT In Review
Jul-19 13:49
- Comms & Tech both underperformed the €IG index by ~1bp this week, bringing YTD underperformance to 9bp and 12bp respectively.
- No €IG supply again this week though TeamSystem did come in for a EUR 700mn 7y FRN (B2/B-/B+) that tightened 37.5bps to price at 3mE+350. Since the second week of June (when we saw ITV, Dell and BT come to market) we have had just one €IG TMT deal, the EUR 300mn Radiotelevisione Italian deal on 03 July. Respectively these lines are +3bp/-5bp/-12bp/-17bp since issuance.
- On the ratings front we saw ASML moved to a positive outlook at Moody’s (now A2[P]/A+) while S&P moved TeamSystem to outlook positive on their refinancing (now B2/B-[P]/B). Optics Bidco was rated BB+[N] by S&P (now Ba1/BB+[N]/BB).
- This week saw earnings from Ubisoft (mixed), Netflix (slight credit positive), Publicis (credit positive), Nokia (credit negative), Telenor (slight credit positive), Telia (slight credit positive), Omnicom (mixed), Telekom Austria (neutral), ASML (slight credit positive though reports of trade curbs overshadowed), Tele2 (neutral) and Elisa (neutral).
- In terms of news, we saw Warner Bros bonds sell off on reports of a split which would see the bulk of net debt remain with the TV segment; https://marketnews.com/wbd-bonds-sell-off-on-reports-of-split-debt-expected-to-remain-with-tv-segment.
- We also saw a sell-off in Teleperformance bonds similar to the last sell-off in February when Klarna announced a new AI product that could harm Teleperformance’s call centre operations though this time the announcement came from Salesforce; https://marketnews.com/teleperformance-equity-sells-off-on-salesforce-ai-announcement.
- There were also reports that Verizon could sell 5000-6000 of its towers for over USD 3bn; though the article makes no mention of America Towers we note that a sublease agreement between the two is due to expire in March 2025 which could coincide with a deal; https://marketnews.com/reports-verizon-baa1-bbb-a-to-sell-towers-ahead-of-amt-baa3-bbb-bbb-lease-lapse.
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EGBS: Stabilising Ahead Of Tuesday's Lows
Jun-19 13:48
EGBs have stabilised after drifting lower, with yesterday’s lows in the major futures contracts remaining untested.
- Bunds -20 at 132.40. Technically, a bull cycle remains in play in the contract, with last Friday’s high (133.21) the first resistance. Bears will need to force a move through the 50-day EMA (131.64) to threaten the current bullish theme.
- 10-Year OAT & BTP spreads vs. Bunds are ~2bp wider on the day.
- The EC matched widely held expectations earlier today, opening Excessive Deficit Procedures for 7 EU member states: Belgium, France, Italy, Hungary, Malta, Poland and Slovakia.
- The EC also concluded that Spain, Portugal and Greece “retain the capacity to repay their debt” in post-programme surveillance reports.
- This may have had a marginal impact on cross-market spreads.
- Tomorrow will see the first round of OAT issuance since President Macron announced the snap election on June 9, providing a key litmus test for that market.
- Any spillovers from the SNB and Bank of England meetings will also garner interest.
SONIA: Sonia put spread trades for more
Jun-19 13:36
SFIQ4 94.90/94.75ps 1x2, bought for 2.25 again in 2k, was bought earlier in 5k.
EQUITY TECHS: E-MINI S&P TECHS: (U4) Bull Cycle Extends
Jun-19 13:36
- RES 4: 5622.69 2.764 proj of the Apr 19 - 29 - May 2 price swing
- RES 3: 5600.00 Round number resistance
- RES 2: 5594.66 2.618 proj of the Apr 19 - 29 - May 2 price swing
- RES 1: 5572.00 2.50 proj of the Apr 19 - 29 - May 2 price swing
- PRICE: 5565.50 @ 14:24 BST Jun 19
- SUP 1: 5433.13/5345.64 20- and 50-day EMA values
- SUP 2: 5267.75 Low May 31 and key support
- SUP 3: 5213.25 Low May 6
- SUP 4: 5155.75 Low May 3
The uptrend in S&P E-Minis remains intact and the contract has traded higher this week, confirming an extension of the current bull cycle. Price has recently cleared 5430.75, the May 23 high and bull trigger. This confirmed a resumption of the uptrend. Note that MA studies are in a bull-mode position too, highlighting positive market sentiment. Sights are on 5572.00 next, a Fibonacci projection. Initial support lies at 5433.13, the 20-day EMA.
