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4-Traders Homepage  >  Equities  >  NASDAQ OMX COPENHAGEN  >  Nordea Bank    NDA DKK   SE0000427361

NORDEA BANK (NDA DKK)
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Bank Bonds Lead Corporate Market Higher

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03/14/2012 | 06:31am CEST
   By Patrick McGee 
   Of  
 

A range of companies is tapping the U.S. credits markets on signs that investor demand for risky assets is holding up, particularly after the Federal Reserve said 15 of the biggest 19 U.S. banks would survive a depression-style hit to the economy.

At least four sizable issues are in the market, including a three-year offering from J.P. Morgan Chase & Co. (>> JPMorgan Chase & Co.), plus two-part offerings from Nordea Bank (NRDEF, NRBAY, NDA.SK), Philip Morris (PM), and Medtronic (>> Medtronic, Inc.).

J.P. Morgan helped push up the entire U.S. equity market Tuesday when it reported a 20% increase in its quarterly dividend and authorized $15 billion in stock buybacks, just before the Fed released results of its Comprehensive Capital Analysis and Review, also known as the "stress tests" for the 19 largest banks.

Dividend increases and stock buybacks are shareholder-friendly activities that are, at best, neutral to bondholders. But the sign of strength banks showed in the stress tests spurred investors to buy bank bonds, said Jesse Fogarty, portfolio manager at Cutwater Asset Management.

"Bank spreads closed very firm as the overall message from the domestic banking sector was positive despite running the scenario analysis to a pretty harsh downside," he said. "We expect more bank issuance on the recent snap tighter in spreads, getting in any funding before first quarter earnings season begins."

The financial sector is dominating secondary trading. Ten-year paper from Goldman Sachs Group (>> Goldman Sachs Group, Inc.), Morgan Stanley (>> Morgan Stanley), and Bank of America Corp. (>> Bank of America Corp) are outperforming Treasurys by 0.18, 0.27, and 0.23 percentage points, according to MarketAxess.

Barclays Capital strategists said in a note Wednesday that the Fed's tests were "indeed highly stressful and should help ease any concerns regarding the capital position of U.S. banks."

Nordea Bank's $2.75 billion offering includes $1 billion of three-year notes launched at 1.75 percentage points over Treasurys, and $1.75 billion of five-year notes at 2.05 points over Treasurys.

Philip Morris is selling $1.25 billion in five- and 30-year maturities, at respective spreads to Treasurys of 0.68 points and 1.23 points, according to launch terms.

Medtronic's $1.075 billion offering includes 10-year and 30-year bonds at 0.90 points and 1.1 points over Treasurys, respectively.

"Investor appetite is quite strong," said a syndicate manager in New York. "The technicals supporting the market remain in place even after the large supply of volume last week."

The $41.9 billion of high-grade debt sold last week was the second-highest in weekly records going back to 1995, and the most since early 2009, according to data provider Dealogic. This week's tally has been more subdued, with roughly $7.5 billion priced Monday and Tuesday.

The market tone continues to improve from the best levels in eight months, according to Markit's CDX North America Investment-Grade Index, a measure of corporate bond sentiment. It advanced 1.1% Wednesday to 90 basis points, on track to finish at its best level since July 1.

Key drivers of the rally are strong U.S. economic data and the Greek deal being put to bed, according to Scott MacDonald, head of research for MC Asset Management Holdings.

"The rally continues, albeit with a little more volatility injected into the mix," he added. "It reflects creeping optimism over U.S. economic growth, which is filtering into markets."

Yields on corporate bonds rose 0.04 percentage points to 3.39% on Tuesday's, but spreads compressed 0.017 points to 1.826 points over Treasurys. The 3.39% yield is the highest since February 21, but still just 0.12 points from the record low.

-By Patrick McGee, Dow Jones Newswires; 212-416-2382; [email protected]

Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA 0.27% 30.26 Delayed Quote.2.51%
GOLDMAN SACHS GROUP -0.87% 251.96 Delayed Quote.-0.23%
MORGAN STANLEY -0.44% 54.46 Delayed Quote.4.25%
NORDEA BANK 0.05% 88.64 Delayed Quote.-10.74%
NORDEA BANK 0.28% 63.62 Delayed Quote.-15.40%
PHILIP MORRIS INTERNATIONAL -1.60% 84.27 Delayed Quote.-20.24%
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Financials (€)
Sales 2018 9 608 M
EBIT 2018 4 628 M
Net income 2018 3 412 M
Debt 2018 -
Yield 2018 8,23%
P/E ratio 2018 10,17
P/E ratio 2019 10,10
Capi. / Sales 2018 3,60x
Capi. / Sales 2019 3,56x
Capitalization 34 608 M
Chart NORDEA BANK
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Nordea Bank Technical Analysis Chart | NDA DKK | SE0000427361 | 4-Traders
Technical analysis trends NORDEA BANK
Short TermMid-TermLong Term
TrendsBearishBearishBearish
Income Statement Evolution
Consensus
 
Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 9,91 €
Spread / Average Target 16%
EPS Revisions
Managers
NameTitle
Casper W. von Koskull President & Group Chief Executive Officer
Björn Arne Christer Wahlroos Chairman
Torsten Hagen Jørgensen Group Chief Operating Officer, Deputy CEO & EVP
Christopher Rees Group CFO & Head-Group Finance & Treasury
Paul Bari Group Chief Investment Officer & Head-Technology
Sector and Competitors
1st jan.Capitalization (M$)
NORDEA BANK-15.40%42 521
JP MORGAN CHASE & COMPANY4.24%380 160
INDUSTRIAL AND COMMERCIAL BANK OF CHINA-4.52%328 236
BANK OF AMERICA2.51%309 974
CHINA CONSTRUCTION BANK CORPORATION-4.04%272 699
WELLS FARGO-13.37%256 287