Danske Research Team
Danske Bank A/S
Headlines
Market sentiment is gradually improving.
The ECB announced the results of its comprehensive review of European banks.
The Fed ended QE3.
Sweden’s Riksbank added to the group of central banks with a zero rate.
Market commentary
Following a shaky market in mid-October with volatile movements in rates, FX and stocks, the past two weeks have been relatively calm. In tandem with improved market sentiment, secondary as well as primary market activity has slowly picked up pace following the mid-October hiccup. Credit spreads have more or less moved sideways compared with the previous week, with a slight tightening tendency.
The week kicked off with the announcement of the results of the EBA stress tests on European banks. From a Nordic perspective, the results were positive, as they confirmed the robustness of the Nordic banks. As expected, the Nordic banks came out strong compared with the European average and were 7.4pp above the threshold of 5.5%, compared with the European average of 5.3pp. Among the Nordic banks, only the Danish banks were requested to implement the results of the AQR in their earnings, although most of this has already been included. More details on the stress tests can be found in the analysis Nordic Robustness: Nordic banks pass the EBA stress test with flying colours, 26 October
Reporting season is in full swing and we note a mixed picture among corporates, while the Nordic banks have presented positive reports overall. In the corporate sphere, Vattenfall‘s Q3 report stood out as the company is taking on a sizable impairment loss totalling SEK23bn, related mainly to non-Nordic operations.
In a rather quiet primary corporate market, Nestlé was able to come out with its first euro issue in over a year on Wednesday. The Swiss-based Aa2/AA-rated food conglomerate issued EUR500m at ms +20bp, a seven-year tenor. Among Nordic issuers, we note that the Swedish truck producer Scania issued SEK2.5bn two-year bonds at the spread ms +20bp.
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