巴黎银行-欧洲-信贷市场-欧洲信贷策略：这个信贷周期还将持续更长时间-20190212-72页_1mb

European Credit Strategy Summary

Core Content

This document outlines the European Credit Strategy for 2019, focusing on the current state of the credit cycle, macroeconomic outlook, and sector-specific recommendations. It emphasizes the longer-than-expected duration of the current credit cycle, the influence of central bank policies, and the interplay between supply and demand dynamics.

Outlook and Forecasts

• Base Case: Growth is expected to remain weak, with high idiosyncratic risk. However, the credit cycle is projected to extend further.
• Mini-2016 Scenario: The first half of 2019 is expected to mirror the 2016 environment, with positive returns supported by dovish policies and moderate corporate supply.
• Credit Spread and Excess Returns:
  • € Investment Grade (IG) spreads are forecasted at 120bp (-20bp), with excess returns of 2.3%.
  • € High Yield (HY) spreads are expected to be 395bp (-36bp), with excess returns of 4.1%.
• Default Rates: € HY default rate is projected at 2.5%, up from 1.9% in 2018.
• Net Supply: € IG net supply is expected to be €205bn, while € HY net supply is forecasted at €50bn.
• Growth and Inflation: Eurozone GDP is forecasted at 1.0%, and HICP at 1.4% for 2019.
• FX and Rates: EURUSD is expected to trade at 1.25, ECB deposit rate remains at -0.40%, 2y Bund yield is at -0.50%, and 10y Bund yield is at 0.40%.

Credit Cycle Stage

• European Credit Cycle: The cycle is still in an early stage, with room for further expansion if political stability and global growth continue.
• US Credit Cycle: US Credit is in a late cycle expansion, but not extreme. The Fed is pausing at historically low rates, which could lead to a soft landing.

Key Factors Influencing the Credit Cycle

• Leverage: High but not rising significantly, with Non-Financials showing a moderate decline in net supply.
• Credit Conditions: Expected to remain stable or ease, as central banks like the ECB and PBOC are likely to stop tightening.
• Risk Appetite: Still relatively high, with M&A activity and loan growth on an uptrend, albeit not aggressive.
• Policy Stance: Dovish central banks are supporting the credit cycle, with the Fed and ECB pausing rate hikes.
• Growth Cycle: Europe is aligning with trend growth, while the US is slightly above trend.

Sector Recommendations

Investment Grade (IG)

• Favor: Long-duration IG Credit (>5yr), defensive high beta instruments like Hybrids and Bank capital.
• Sector Outlook:
  • Upside: Autos (ASTONM, RACE, PCIM), Energy (ENI), Utilities (EDF, Enel), Corporate Hybrids.
  • Downside: TMT (Orange, Ericsson), Real Estate (Covizio, Colonial), Retail & Consumer (Kering, Carlsberg).

High Yield (HY)

• Sector Outlook:
  • Upside: Energy (Enquest, Neptune Energy, Tullow Oil, KCA Deutag), Food & Beverage (Pizza Express, Boparan), Chemicals (Chemours, Huntsman), Packaging (Ardagh, Smurfit, CCK).
  • Downside: Retail (Takko, Douglas), French Retail, Construction (Salini, CMC Ravenna, Astaldi).

Supply vs. Demand Dynamics

• Gross Supply: Expected to increase, driven by Financials and Non-Financials.
• Net Supply: Likely to increase for IG but decrease for HY.
• Non-Financials: Net supply is expected to decline by ~10%, with sectors like Real Estate and Infrastructure showing positive net supply, while Telecoms and Chems/Pharma are negative.
• Financials: Net issuance is expected to rise, with Senior Financials and AT1 instruments showing positive trends, though a new TLTRO could limit this.

Political and Economic Risks

• Political Risks: No longer increasing, with the ECB and other central banks showing a data-dependent approach.
• Key Events: EU parliamentary elections, Brexit, and ECB leadership changes are expected to influence the market in 2019.
• Global Trade Deal: Expected to reduce macro uncertainty and support a growth rebound.

Market Drivers and Event Calendar

• Earnings Season: Expected to be a non-event, with moderate impact on spreads and limited market movement.
• Event Calendar: Includes EU elections, ECB policy changes, and Brexit-related developments.

Conclusion

The European credit cycle is expected to extend further in 2019 due to dovish central banks, cautious corporate behavior, and reduced macro uncertainty. IG credit is favored for its moderate risk and better returns, while HY credit is seen as a potential source of value despite higher risk. The market is sensitive to supply and demand dynamics, with the supply side playing a significant role in sector performance. Political stability and global growth will be key factors in determining the cycle's trajectory.