Credit

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Ports & Special Economic Zone
• Bharti Airtel

• In the US, existing home sales rose 3.4% m-o-m in October (2.9% e / -1.3% revised p) to an annualised 3.96 mn units.
• That said, existing home sales grew at the slowest pace since late 2010, amid rising mortgage costs.
• Separately, the Conference Board leading index fell 0.4% (-0.3% e / -0.3% revised p) to 99.5 in October 2024. 

• The US indictment of key executives is a material credit negative for the Adani Group, with the allegations being more serious than those from Hindenburg Research’s short-sell report in January 2023.
• In the near term, the US indictment is likely to constrain the group’s access to financing, particularly in the offshore market.
• We note that the Justice Department’s charges are directed at the individual executives, not at Adani Green Energy or other group entities.

• The US indictment of key executives is a material credit negative for the Adani Group, with the allegations being more serious than those from Hindenburg Research’s short-sell report in January 2023.
• In the near term, the US indictment is likely to constrain the group’s access to financing, particularly in the offshore market.
• We note that the Justice Department’s charges are directed at the individual executives, not at Adani Green Energy or other group entities.

• Adani Green Energy Limited (AGEL) is one of the world’s largest developers and operators of solar and wind power.
• The company’s assets are geographically diversified across India, with total locked-in capacity of 20.4 GW (of which 10.9 GW was operational as of June 2024).
• AGEL is listed on the Bombay Stock Exchange and National Stock Exchange of India. 

• In today’s Morning Views publication we comment on developments of the following high yield issuers: China Vanke, Gajah Tunggal, ReNew Energy, Adani Green Energy, Bharti Airtel, UPL Limited
• Treasuries fell yesterday, with yields up 1-3 bps across the curve following a soft auction of 20Y notes.
• The yield on the 2Y UST rose 3 bps to 4.32%, while that on the 10Y UST was up 1 bp at 4.41%.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Health and Happiness (H&H), Yinson Production, Xiaomi Corp, ReNew Energy
• In the US, October housing starts declined 3.1% m-o-m to an annualised 1.31 mn units (-1.5% e / -1.9% revised p), the slowest pace in three months as builders put off projects in the wake of hurricanes Helene and Milton.
• Meanwhile, October building permits (a proxy for future construction) eased 0.6% m-o-m to an annualised 1.42 mn units.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Adani Green Energy, Yankuang Energy
• In the US, treasuries edged higher yesterday, with yields declining 2-4 bps across the curve on possible dip buying and despite a large slate of corporate bond issuances.
• The yield on the 2Y UST fell 3 bps to 4.28%, while the 10Y declined 3 bps to 4.41%. Equities rebounded from last week’s losses, with the S&P 500 and Nasdaq up 0.4% and 0.6%, respectively.

• In today’s Convertibles Brief publication we comment on developments of the following high yield issuers: Lenovo
• Credit markets widened on Friday, with the iTraxx X-Over increasing 8 bps to 304 bps.
• European bourses declined 0.1-1.3%, except for the IBEX 35 (+1.0%). In the US, the S&P 500 and Nasdaq fell 1.3% and 2.2%, respectively.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Gajah Tunggal, Lenovo
• In the US, advance retail sales came in slightly above expectations at 0.4% m-o-m in October (0.3% e / 0.8% revised p), driven by higher auto sales. In addition, retail sales growth for September was revised upwards to 0.8% (from 0.4%). Retail sales excluding auto expanded 0.1% m-o-m (0.3% e / 1.0% revised p).
• Separately, industrial production fell 0.3% m-o-m in October (-0.4% e / -0.5% revised p), owing to the Boeing machinist strike and lingering impact from hurricanes Milton and Helene.

• Fed Chairman Jerome Powell yesterday said that there is no need for the US central bank to rush rate cuts.
• He said: “The economy is not sending any signals that we need to be in a hurry to lower rates,” adding that “the strength we are currently seeing in the economy gives us the ability to approach our decisions carefully”.
• Following Mr Powell’s comments, traders reduced their expectations for an interest-rate cut in December to 60% from 80% earlier. 

• USTs were sold off across the curve yesterday. The yield on the 10Y UST increased 12 bps to 4.42%.
• Open interest rose for the fourth consecutive session on the 2Y notes contract, with traders building up bearish positions following the US presidential election.
• Traders are pricing in just over a 50% chance that officials will deliver another quarter-point rate cut in December, and are now pricing in about two US rate cuts through June 2025 (vs. almost four projected at the start of last week).

• We expect the company to encounter challenges in free cash flow generation, which will pressure credit metrics and hinder post-acquisition deleveraging.
• The 2033 notes are the only ones within Minerva’s capital structure that do not trade tight to the LatAm BB and EM BB curves. 
• However, we believe a better entry point for these notes may emerge based on our expectation of a weakening credit profile in the short term.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Green Energy

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Green Energy
• CIFI Holdings
• Medco Energi