Financials Credit Analyst

Hank Calenti, CFA

CreditContinuum

Credit

Coronavirus capitulation is creating value within certain securities. Nouriel Roubini and Scott Minerd are back in fashion and that’s a buy sign. To be honest, we worried that markets were too sanguine regarding the coronavirus and marveled at the strength of liquidity in support of asset prices. Now that we have a correction, it’s time to look for possible winners once the panic is over.We do not buy the argument that this is 2008. There are major differences in terms of banking system and consumer leverage metrics. Those items take time to reset. Rather, we see this week’s sell-off as a correction of overly optimistic, liquidity-driven, euphoria. And it was not all coronavirus, JPMorgan reminded investors that it is not immune to interest rates and lowered its net interest income forecast while other companies dropped guidance on clearly slowing global growth. We’re not sure what’s worse, the fact that economic growth will slow or that millionaire Bernie Sanders will capitalize on it. As such, this may be more of a U-shaped than sharp and shallow V-shaped recovery; but recovery is what we anticipate.In this weekly, we investigate recent Asian bank spread moves, place them in context relative to global banks and identify securities that are beginning to look oversold.

Coronavirus capitulation is creating value within certain securities. Nouriel Roubini and Scott Minerd are back in fashion and that’s a buy sign. To be honest, we worried that markets were too sanguine regarding the coronavirus and marveled at the strength of liquidity in support of asset prices. Now that we have a correction, it’s time to look for possible winners once the panic is over.We do not buy the argument that this is 2008. There are major differences in terms of banking system and consumer leverage metrics. Those items take time to reset. Rather, we see this week’s sell-off as a correction of overly optimistic, liquidity-driven, euphoria. And it was not all coronavirus, JPMorgan reminded investors that it is not immune to interest rates and lowered its net interest income forecast while other companies dropped guidance on clearly slowing global growth. We’re not sure what’s worse, the fact that economic growth will slow or that millionaire Bernie Sanders will capitalize on it. As such, this may be more of a U-shaped than sharp and shallow V-shaped recovery; but recovery is what we anticipate.In this weekly, we investigate recent Asian bank spread moves, place them in context relative to global banks and identify securities that are beginning to look oversold.

Asian Bank HY Credit Weekly: It Was Ugly, What May Be Oversold

Asia High Yield Bond Index

Asian Bank HY Credit Weekly: It Was Ugly, What May Be Oversold