巴黎银行-全球-信贷市场-巴黎银行月度信贷会议：这个信贷周期还将持续更长时间-20190212-17页_486kb

Summary of BNPP Monthly Credit Call (February 2019)

Core Content Overview

This document is a credit strategy report from BNP Paribas, authored by Viktor Hjort, Carlo Mareels, and Timothy Rea, focusing on the current state and outlook of the credit cycle, European banks, and the automotive sector. The report highlights the extension of the current credit cycle, the cautious stance of central banks and corporates, and the potential for a growth rebound due to macroeconomic clarity.

Main Views and Key Information

1. Credit Cycle Extension

• The current credit cycle has further to run, with a base case of weak growth and high idiosyncratic risk.
• The next few quarters may resemble a mini-2016, with a market environment that includes a dovish central bank stance and conservative corporate behavior.
• The market has already priced in a potential 'ECB taper tantrum', indicating a put-option for weaker growth.
• Central banks (Fed, PBOC, ECB) are data-dependent and have not abandoned their growth outlook, supporting a safe carry trade with moderate upside.

2. Credit Conditions and QE/QT Impact

• Credit conditions may not tighten as much as feared in 2019 due to the end of quantitative tightening by the Fed and ECB, and potential expansion by the PBOC.
• Credit is the most sensitive asset class to QE/QT due to the alignment of portfolio and fundamental impacts.
• The BNPP Credit Conditions index shows tightening trends, but the pace is expected to slow.

3. European Credit Outlook

• European credit markets are in a weak growth environment, with GDP at 1.0%, HICP at 1.4%, and default rates at 2.5%.
• The Euro Aggregate Index is a key reference for credit valuations.
• Cyclical sectors like Autos and Retail are still under pressure and not yet out of the woods.
• Defensive sectors such as Utilities and Corporate Hybrids are favored.

4. Sector Recommendations

• IG Non-Financials: ↑ (upward)
• Autos: ↓ (downward)
• Metals & Mining: =
• Energy: ↑ (upward)
• Real Estate: ↓ (downward)
• Retail and Consumer: ↓ / =
• TMT: ↓ (downward)
• Utilities: ↑ (upward)
• Corporate Hybrids: ↑ (upward)
• Financials: =
• Senior Financials: ↓ (downward)
• Lower T2: =
• AT1: ↑ (upward)
• HY: ↓ (downward)

5. European Bank AT1s

• 14 AT1s are set to mature in 2019, with SANTAN having material extension risk due to unfavorable refinancing conditions.
• A non-call of at least one SANTAN AT1 is already priced in, with a likely price drop of a few points but not below 94 cents for the 6.25% coupon.
• BACR has the largest notional redemption, with €4.7bn equivalent, and Lloyds also has a significant AT1 excess.
• The broader AT1 market impact from a non-call is expected to be muted.

6. European Autos Outlook

• Global Light Vehicle sales fell 0.5% in 2018, marking the end of an 8-year growth streak.
• 2019 is expected to see continued production disruptions due to trade tensions, Brexit, WLTP regulations, and rising vehicle costs.
• Suppliers are more vulnerable than OEMs due to inventory and content cuts, and pricing pressures.
• Powertrain suppliers face the most disruption due to the shift to electric vehicles (EVs), which are simpler to build and have different strategies.
• EV adoption is being driven by government policies and emission regulations, but the speed of transition is uncertain.
• The report remains cautious on Powertrain suppliers and recommends a 'Sell' on Schaeffler.

7. Investment Strategy

• The report recommends favoring long-duration IG Credit and defensive high beta instruments like Hybrids and Bank capital.
• Cyclical sectors are considered too risky to buy aggressively at this time, with the catalyst for recovery being a soft Brexit and trade deal progress.

Key Charts and Data Points

• The Euro Aggregate Index is used as a benchmark for credit valuations.
• The BNPP Credit Conditions index indicates tightening but with reduced pace.
• The report includes forecasts for credit spreads, excess returns, and sector performance for 2019.
• The report also includes data on global light vehicle sales, inventory ratios, and EV growth forecasts.

Legal and Regulatory Notes

• The document is a marketing communication and not a research report.
• It is intended for professional clients and eligible counterparties under MiFID II.
• The views expressed may differ from those of the BNPP Research Department.
• BNPP may engage in transactions in the instruments discussed and may have proprietary positions.
• The report includes important disclosures regarding conflicts of interest, compensation, and liability.
• The content is not investment advice and should not be relied upon for making investment decisions.