The Scottish independence referendum took the spotlight

Headlines

• The Scottish independence referendum took the spotlight

• New Danske Bank Markets Credit Outlook published today

• TDC acquires Norwegian cable operator GET

• New provisioning rules for banks

Market commentary

Following a cautious tone last week, the market ended this week on a strong note following Scotland’s ‘No’ vote to the Referendum for Independence. Overall, the Itraxx Main and cross-over moved tighter by some 5bp and 22bp, respectively. Yields continue to be at low levels in a historical context and this, coupled with a benign investor sentiment, should continue to bode well for new issuance activity. Indeed, this week saw a large amount of new issues across most categories. We note that A.P. Moller–Maersk issued its first ever USD bonds. The transaction included an USD750m five-year bond and an USD500m 10-year bond with coupons of 2.55% and 3.75%, respectively. Other noticeable issues from the Nordic included Nordea’s AT1.

We are publishing our Credit Outlook publication today, this time in a new presentation format. We have in-depth comments on 13 different sectors across our coverage with selected bonds for each sector as well as a strategy introduction with our current thoughts.

TDC acquires GET – agencies differ on rating impact

On Monday, TDC announced its intention to acquire Norwegian cable operator GET for NOK13.8bn. Interestingly, the transaction will be funded by a mix of hybrids and senior debt and will thereby expand the Nordic hybrid space. Moody’s downgraded TDC one notch to ‘Baa3’ after the acquisition was announced as Moody’s ‘expects the deal will weaken TDC’s credit metrics beyond levels commensurate with the previous rating’. However, Fitch kept its ‘BBB’ rating unchanged although the acquisition will take the company’s FFO/adjusted leverage above Fitch’s downgrade threshold, as TDC will be given a period of between 18 months – two years in order for leverage to be brought back within the downgrade threshold.