|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||13.93 - 13.93|
|52 Week Range||10.01 - 15.02|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||4.30|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||8.39|
(Bloomberg Opinion) -- “Worrisome.” “Dangerous and aggressive.” “Abuse of documentation.” “Peak greed.”These are just a few of the ways investors and analysts have described the riskiest corners of the debt markets in the past few days. From the U.S. to Europe, whether in collateralized loan obligations or junk bonds, the feeling that the reach for yield in fixed income is fast approaching a breaking point is becoming too powerful to ignore. It’s perhaps best encapsulated by a quote in the Wall Street Journal from Luca Cazzulani, a senior fixed-income strategist at UniCredit: “Investors are not really interested in safety, they are quite keen on yield.’’That’s good, I guess. Because for those who still favor strong credit protection, it’s getting harder and harder to find it. Let’s start with CLOs. Bloomberg News’s Adam Tempkin had an in-depth article this week with the headline “CLOs Are Packed With New Loopholes, Triggering Investor Backlash.” He reported that investors, analysts and credit raters are taken aback by managers’ efforts to “swap troubled loans, circumvent credit-quality limitations, and double down on risky wagers, largely in an effort to ensure they can pass crucial compliance tests, even if a large swath of a CLO’s underlying loans lose value.” Many understand that having a bit of flexibility in an illiquid market is a good thing when prices fluctuate but argue that provisions like these create the potential for severe losses if the credit cycle truly turns.The same problem plagues the market for speculative-grade corporate bonds. Covenant Review, an independent research firm that analyzes debt documents for investors, published its 2019 year-in-review for the U.S. high-yield market this week and found many cases in which companies “ended up keeping some of the most dangerous and aggressive covenant provisions for bondholders.” A common strategy was for issuers to propose so many offensive covenants that even after a “hack and slash treatment to appease concerned bond investors,” they still got away with far more questionable terms than in the past.It would be one thing if bond investors were compensated for those risks — giving up some safety for yield is a classic trade-off. But, of course, that’s not the case.Rather, the yield on an index of double-B U.S. corporate bonds hit a record low of 3.47% this week. VICI Properties, a double-B rated real estate company that develops entertainment and hospitality centers, priced $750 million of five-year bonds with a 3.5% coupon, the lowest for that maturity in more than six years. To be clear, it’s not any better elsewhere up the credit spectrum, as yields on a Moody’s Corp. index of triple-B corporate bonds and a Bond Buyer index of municipal debt are both around the lowest since 1956. Even triple-C yields have fallen by 200 basis points in two months.Record-setting interest rates aren’t limited to America. In Austria, as my Bloomberg Opinion colleague Marcus Ashworth wrote, Erste Group Bank AG priced a so-called CoCo bond to yield 3.375%, the second-lowest coupon ever for the risky debt. And European high-yield bond sales are poised to top $11 billion this month, the most-ever for January.By now, it’s possible that the $100 trillion global bond market has simply become immune to reaching unprecedented levels. But the potential for complacency is scary, especially when someone like Bob Prince, who helps oversee the world’s biggest hedge fund at Bridgewater Associates, declares that the days of a boom-and-bust economic cycle are over.This brings to mind a piece of investing advice that has always stuck with me: Bull markets don’t end when everyone is on high alert for what could go wrong. It’s when everyone willfully chooses to ignore those warning signs that the cycle inevitably turns. The combination of weak credit protections and historically low yields on the riskiest corporate debt should be a clear red flag. Instead, when asked about financial-market bubbles, the one thing that came to mind for JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon was negative-yielding sovereign obligations. “Do you know anyone who’s actually bought a negative interest rate bond?” he asked CNBC’s Andrew Ross Sorkin. “I would never buy a negative rate bond. Not unless I was forced.”(1)I get it. It’s tempting to bash negative-yielding bonds and anyone who owns them. Even though it has been several years since sovereign-debt yields fell below zero in Japan and some European countries, the concept still boggles the minds of Wall Street veterans. Who would purchase a security that locks in a loss if held to maturity?But I would pose the same question to buyers of speculative-grade securities at these rock-bottom yields. If you’re still of the mind that economic cycles exist, then it stands to reason that the longest expansion in U.S. history is long in the tooth. Will a sub-3.5% yield on double-B bonds, or sub-5% on single-B bonds, be enough to cancel out principal haircuts in the case of default? Perhaps. But it’s worth remembering that lending to the wrong companies can also lead to losses — and possibly large ones — even if dicey companies have largely avoided disaster in recent years.Now, there are some nascent signs that investors are anxious about their ability to pick winners after years of just about every wager paying off. Bloomberg News’s Caleb Mutua this week highlighted research from Barclays Plc that showed junk bonds experienced a much sharper sell-off when downgraded in 2019 than in previous years. Usually, bond traders pride themselves on having superior information and being ahead of the credit raters. That confidence might be wavering.Whether those fleeting jitters turn into anything more remains to be seen. Certainly, the Federal Reserve and other central banks aren’t about to do anything to derail the economic expansion with inflation still in check. And as long as yields and spreads remain near these lows, investors probably won’t lose much sleep over the daunting record $1.2 trillion of U.S. speculative-grade debt that’s set to mature through 2024.Yet just because there’s no clear catalyst for a reversal today doesn’t mean investors are safe from a nightmare scenario in the future. At the very least, they should push for stronger protections when they buy new bonds or loans. As it stands, if and when the credit cycle turns and the losses mount, they’ll have no one to blame but themselves.(1) Bloomberg News's Liz Capo McCormick quickly pointed out that plenty of Americans own negative-yielding debt, through Vanguard’s Total International Bond Index Fund.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Italy's biggest bank UniCredit said on Wednesday it had appointed a number of senior managers to new roles, shuffling people across jobs as it works to implement its 'Team 23' four-year plan unveiled in December. UniCredit said it had named Christian Steffens, currently had of corporate investment banking (CIB) in Britain as head of CIB Americas, subject to regulatory approval. The current head of CIB Americas, Francesco Salvatori, will become head of corporate sales and marketing in Italy from April, alongside Lucio Izzi.
(Bloomberg) -- Luigi Di Maio appeared poised to resign as leader of Italy’s insurgent Five Star Movement, triggering a bond sell-off and adding to political uncertainty as the country heads to regional elections this weekend.Di Maio may step back ahead of the party’s likely defeat in elections in Emilia Romagna and Calabria on Sunday, according to a person familiar with the matter who asked not to be named discussing confidential deliberations. Di Maio will likely stay on as foreign minister, the person said.Leaders of Five Star, the senior party in Italy’s fractious coalition government, are meeting Wednesday morning to discuss Di Maio’s plan to resign, Italian newspapers reported. An announcement could come as part of a scheduled party event at 5 p.m.The yield on Italy’s 10-year debt climbed as much as eight basis points. The FTSE Italia All-Share Banks Index dropped 1.4%, with UniCredit SpA losing 2.4% and Intesa Sanpaolo SpA slipping 0.9%.Vito Crimi, a senior Five Star lawmaker, or Justice Minister Alfonso Bonafede may become the party’s provisional leader, daily La Stampa reported.For Di Maio, the beginning of the end came at a luxury hotel by the ancient Forum in Rome.The 33-year-old leader of the populist Five Star movement was taken to task by its founder, Beppe Grillo, a former comic more than twice his age, who told him to stop picking fights with his government partners in the Democratic Party, according to party officials who asked not to be named.The Italian media has speculated that, in pulling out before an electoral debacle, Di Maio may be hoping for an eventual return as leader of a reorganized Five Star. But his party’s convulsions may sound the death knell for a fragile coalition stitched together with the sole purpose of keeping Matteo Salvini’s nationalist League out of power.Five Star and the Democrats both want to avoid an electoral clash with the resurgent League. But voices in both parties also argue that if a vote is unavoidable, they’d be better off pulling the plug on the coalition before it drags them down.Di Maio’s position has also been undermined by mass desertions of Five Star lawmakers and voters alike. Support for the party has slumped to 16% in recent polls, compared with the 33% it posted when it won the 2018 election. The Democrats are at 19% while the League has 31%Since the party signed up for Prime Minister Giuseppe Conte’s second coalition in September, more than 20 lawmakers have abandoned Five Star or been kicked out. Three senators switched to the League in December, and the education minister quit before ditching the party. Another senator was expelled in January after he failed to follow the party line on the budget. Two more lawmakers quit Tuesday.Of those who remain in Five Star’s parliamentary caucus, many are openly discussing changes in the leadership. The Democrats, meanwhile, are asking how much longer they can afford to be linked to such a dysfunctional partner.The rifts are on display in the 17th century Roman palace that houses the lower house of parliament where the tribes of the Five Star Movement regularly gather in a patio flanking the debating chamber to chat, to smoke, and to plot.Dotted around the central fountain you can see the separate huddles -- some pro-coalition, others anti-Di Maio, and some who want a return to the party’s first alliance with the right-wing populists of the League.One Democratic lawmaker who watches the Five Star cliques across the courtyard complains the anarchy inside his party’s coalition partner makes it hard to pin them down even on basics of legislating.Five Star is in such desperate straits that even the Democrats have gotten involved in trying to establish a degree of stability, the deputy added. The Democratic leadership has been issuing regular warnings that the coalition can only continue if it gets things done.Indeed, Democratic Party officials suspect that some within Five Star, including Di Maio, have been echoing Salvini’s anti-European, anti-immigration rhetoric with an eye to ditching the Democrats and reviving their previous coalition.That’s a scenario dismissed by Five Star officials, who say the party is committed to the coalition. But they are struggling to convince anyone they can make good on that commitment.\--With assistance from Dana El Baltaji.To contact the reporters on this story: John Follain in Rome at firstname.lastname@example.org;Jerrold Colten in Milan at email@example.comTo contact the editors responsible for this story: Ben Sills at firstname.lastname@example.org, Karl Maier, Alessandro SpecialeFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
MILAN/LONDON (Reuters) - UniCredit promised 8 billion euros ($9 billion) in dividends and share buybacks on Tuesday in a bid to revive its sickly share price, although profit at Italy's top bank will barely grow despite plans to shed 9% of its staff. Like other European banks, UniCredit is grappling with negative interest rates which make lending unprofitable, while Italy's stagnant economy and unstable politics are compounding its problems, outweighing years of successful restructuring. After cutting a fifth of its staff and shutting a quarter of its branches in mature markets in recent years, UniCredit said it would make a further 8,000 job cuts and close 500 branches under a new plan to 2023.
So Much For A Christmas China Trade Deal The signing of the Hong Kong Human Rights and Democracy Act of 2019 had already put the prospects of a US trade deal with China in jeopardy, and now it seems that the chances of a deal by the end of the year have been completely scuttled. […]The post Market Morning: Trade Deal Scuttled, French Cheese Wars, Gronk Picks CBD over NFL appeared first on Market Exclusive.
(Bloomberg Opinion) -- Jean Pierre Mustier’s new four-year plan for Italy’s UniCredit SpA marks a victorious milestone for the chief executive officer. He’s managed to turn a sprawling European bank laden with bad loans into a simpler entity that promises to improve its returns to shareholders. It leaves him well-placed to plot his biggest move yet (should he so choose): cross-border M&A.The Italian bank has cut costs, sold non-core units and eliminated a bad-debt mountain. While he’s forfeited growth by exiting businesses in Poland and Italian online lending, Mustier has improved profitability. The group return on tangible equity is targeted to exceed 9% this year, up from just 4% in 2015.He’s convinced regulators that the bank doesn’t need as much capital and he’ll seek their approval for the company’s first share buyback since 2004. The 27.8 billion-euro ($31 billion) lender plans to return 8 billion euros ($8.9 billion) to investors in dividends and stock purchases through 2023, giving an implied yield of as much as 7%. That compares with a 6% average for the sector, according to UBS Group AG analysts.All this good work is just as well. While the Frenchman has made UniCredit a more stable, cross-border commercial lender, it still faces huge challenges. That was plain to see in some of the key targets in his “Team 23” strategic plan unveiled on Tuesday.Under assumptions for interest rates that UniCredit says are more severe than the market’s, it sees ROTE declining again. Under this scenario, the measure will be no higher than 8% through 2022, while the bank’s revenue will increase by a meager 0.8% on average annually during the four-year plan. That’s below analyst estimates. Mustier won’t be able to do much more on costs, either; they’ll remain little changed throughout the plan’s duration.Crucially, eking out that modest growth in revenue will depend on UniCredit expanding loans to Europe’s small and medium-sized businesses and consumers at a pace that exceeds GDP expansion.There are some more levers Mustier can pull. UniCredit plans to set up an Italian holding company for foreign assets that could lower its capital needs. It still owns 32% of the Turkish bank Yapi ve Kredi Bankasi, a stake that could be sold.But Mustier’s vision for a “pan-European winner” (his words) may require more radical thought. For the moment, he’s adamant there will be “no M&A,” pointing to smaller, bolt-on purchases. Valuations are a stumbling block to large deals. With UniCredit’s shares trading well below its book value, it makes more sense to pursue buybacks — as Mustier says.Nonetheless, the bank’s smaller, nimbler form positions it for a cross-border deal should the European Union ever complete its banking union. Germany’s Commerzbank AG is often mooted as a partner. If UniCredit’s share price ticks up in the meantime, that would certainly help.To contact the author of this story: Elisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
European stocks on Tuesday recovered some of the ground lost in the prior session, with gains tentative on continuing worries about trade tensions.
European shares wiped gains and ended lower for a fourth session running on Tuesday as sentiment worldwide took a hit after U.S. President Donald Trump signalled delays to reaching a trade deal with China. London's FTSE, packed with trade-sensitive mining and energy stocks, lost 1.8%%, the most in the region, as material shares lost 1.6%.
MILAN/LONDON (Reuters) - Italy's biggest bank UniCredit promised shareholders a 2 billion euro ($2.2 billion) share buyback in an effort to revive its moribund stock, but warned that its profit would barely grow despite plans to shed 9% of its staff. Like other European banks, UniCredit is grappling with negative interest rates which make lending unprofitable, while Italy's stagnating economy and unstable politics are compounding its problems, outweighing years of successful restructuring. UniCredit, which has cut a fifth of its staff and shut a quarter of its branches in mature markets in recent years, said it would make a further 8,000 job cuts and close 500 branches.
Shares of Italian bank UniCredit edged higher as it laid out plans to cut 8,000 jobs by the end of 2023. At its London capital markets event, UniCredit said it was targeting 2023 revenue of 19.3 billion euros ($21.4 billion) and an underlying profit of 5 billion euros, and the rollout of what it calls a "paperless retail bank" in Italy next year and in Germany and Austria in 2021. UniCredit said it plans to return 8 billion euros in capital to shareholders from 2020 to 2023.
Italian bank UniCredit has pledged to halt all lending for thermal coal projects by 2023, joining a growing band of financial companies striving to improve their green credentials. Financing for oil, gas and coal projects has come under particular scrutiny as climate scientists step up calls to change the global economy's deep reliance on fossil fuels to avert disastrous warming. Presenting its sustainability targets a week before the unveiling of a new four-year plan, UniCredit also said it would raise its exposure to the renewable energy sector by a quarter to more than 9 billion euros ($10 billion) by 2023.