Member access

4-Traders Homepage  >  Shares  >  Copenhagen Stock Exchange  >  Nordea Bank AB    NDA   SE0000427361

NORDEA BANK AB (NDA)

15
SummaryChart AnalysisNewsCalendarCompanyFinancialsConsensusRevisions 

Bank Bonds Lead Corporate Market Higher

03/14/2012 | 12:31am US/Eastern
Recommend:
0
   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; patrick.mcgee@dowjones.com

Recommend :
0
React to this article
Latest news on NORDEA BANK AB
2d ago NORDEA BANK : Oslo Børs - OSPA11 PRO - New bond issue to be listed on Nordic ABM..
08/13DJEuropean Banks Ink Loan to Russian Steelmaker
08/12 NORDEA BANK : Company Announcement No. 78, 2014 – Addendum to Nordea Kredi..
08/12 NORDEA BANK : Company Announcement no. 77, 2014 – Investor Presentation an..
08/07 NORDEA BANK : Company Announcement No. 75, 2014 - Auction of covered mortgage bo..
08/06 NORDEA BANK : Lira at 4-month low amid market sell-off
08/06DJUBS : Correction to Turkish Lira Slumps Ahead of Presidential Vote Story
08/06DJTurkish Lira Slumps Ahead of Presidential Vote
07/24DJDANSKE BANK A/S : Raises 2014 Outlook as Second-Quarter Profit Exceeds Expectati..
07/23 NORDEA BANK : DryShips Gets Receipt of Senior Secured Credit Facility
Advertisement
Chart
Duration : Period :
Nordea Bank AB Technical Analysis Chart | NDA | SE0000427361 | 4-Traders
Income Statement Evolution
Nordea Bank AB : Income Statement Evolution
More Financials
Dynamic quotes  
ON
| OFF