巴黎银行-欧洲-投资策略-欧洲信贷展望2019：保持冷静并继续-20181212-73页_2mb

European Credit Outlook 2019 Summary

Core Content Overview

This document provides a comprehensive credit outlook for Europe in 2019, analyzing the credit cycle, supply and demand dynamics, political risks, and sector-specific performance. The report is authored by BNP Paribas analysts and includes forecasts, recommendations, and key themes for investors in both Investment Grade (IG) and High Yield (HY) credit markets.

Main Themes and Outlook

1. Credit Cycle Dynamics

• European Credit Cycle is younger than the US cycle, suggesting it has more room to run.
• The US is in a late-cycle expansion, with credit underperforming equities and government bonds.
• European Credit Cycle is in an early recovery phase, indicating better performance relative to government bonds and higher potential for positive returns.

2. Credit Conditions Tightening

• Credit conditions are expected to tighten gradually due to reduced central bank bond purchases.
• This tightening is not yet extreme, but it could lead to higher default rates and lower returns for High Yield.
• The 2014-15 playbook suggests that tighter credit conditions will increase idiosyncratic risk and reduce credit availability.

3. Political Risks

• Italy and Brexit are major political risks in 2019.
• Despite uncertainty, Italian credit is seen as attractive, and UK credit is fairly priced with respect to Brexit risks.

4. Growth and Inflation Outlook

• Growth is expected to stabilize at 1.4% GDP and 1.8% CPI in 2019.
• A meaningful slowdown is already priced in, but a rebound depends on resolving Brexit and trade issues.

5. Relative Value Themes

• Defensive sectors such as Energy, Hybrids, and Utilities are favored.
• Cyclicals are considered cheap but still face uncertainty.

Key Forecasts and Returns

2019 Credit Spread and Excess Returns

2018 Asset Class Returns

Sector Recommendations

€ Investment Grade (IG)

• Favorable sectors: Energy, Hybrids, Utilities
• Negative sectors: Autos, Real Estate, Retail and Consumer, TMT

€ High Yield (HY)

• Favorable sectors: Energy, Food & Beverage, Chemicals, Packaging, Construction, Retail
• Negative sectors: Not explicitly listed, but overall HY is not considered attractive

Supply and Demand Outlook

Gross and Net Supply

• Gross supply is expected to increase in 2019, with Financials and Utilities leading the way.
• Net supply will also increase, primarily driven by Financials, with Non-Financials experiencing a moderate decline.

Sector-Specific Supply Outlook

• Non-Financials: Net supply is expected to decline by ~10%, with commodity-related sectors facing negative net supply.
• Financials: Senior Financials will see increased net issuance due to MREL/TLAC instruments and Preferred Senior bonds.

Demand Trends

• ECB crowding is over, with CSPP redemptions unlikely to be a significant source of demand in 2019.
• Global flows are expected to turn positive with increased repatriation of funds from USD to EUR.
• Insurance demand remains limited due to structural trends, but may improve later in the year as yields rise.

Event Calendar for 2019

• EU parliamentary elections
• UK leaves the EU (Brexit)
• New ECB president takes office
• G20 summit
• European Parliament elections

Conclusion

The 2019 outlook for European credit is mixed, with improved valuations and moderate returns expected. While the credit cycle is still early, tightening credit conditions and political uncertainties pose challenges. Investors are advised to favor defensive sectors and monitor supply and demand dynamics closely. The overall sentiment is cautiously optimistic, with the potential for growth rebound if political and macroeconomic uncertainties are resolved.