IFR: US CORP BONDS-Risk wary

BRADENTON, April 12 (IFR) – The US high grade market had a
big day yesterday with USD8.562bn priced – mainly made up of
WMT’s USD5bn 4-part and SOCGEN’s USD3.5bn two-part, both of
which went very well.

“Everyone was worried about earnings. But today it kind of
feels like ‘the tone is great – just go,” said one source on
Monday’s tone.

However, the first earnings report out of the gate from
Alcoa was less than stellar. This combined with more
aftershocks in Japan, which is now likening Fukushima to
Chernobyl, and a drop in commodities to weigh on stocks/risk
this morning.

MARKETS

Dow Futures are down 56 as of 7am, with S&P Futures down
6.90 and Nasdaq Futures down 9.75.

In Europe, the FTSE is down 0.97% and the DAX is down 1.03%
as of around 6:55am.

On the CDS side, the iTraxx Main is wider by 1.50bp at 96.75
mid and Crossover is out 7bp at 367 mid.

The 10yr UST yield is down 4bp this morning at 3.547%.

NEWS

COMMODITIES TUMBLE FROM RECORD PEAKS – WEIGH ON STOCKS –
REUTERS: Global share prices slipped on Tuesday while commodity
prices tumbled from record peaks after a Goldman Sachs report
advised investors to lock in profits before oil and other
commodity markets reverse.

Retreating commodity prices weighed on global equities,
sending MSCI’s main world equity index down 0.7 percent by 0925
GMT, on track for its biggest one-day fall in four weeks.

The FTSEurofirst 300 index of top European shares slipped
1.2 percent, with miners and energy firms among the heaviest
losses. Emerging markets, which count several resource-exporters
among their ranks, fell 1.3 percent.

The bout of profit-taking that knocked Brent crude off
Monday’s 2-1/2 year highs was triggered by a report from
long-term commodity bull Goldman Sachs, which warned its clients
that oil and other raw material prices could retreat after
strong recent gains.

Spot gold retreated from Monday’s record peak while silve
sagged from the previous session’s 31-year high.

Market sentiment was also hit by Japan’s move to raise the
severity of radiation leakage at its stricken Fukushima nuclear
plant, putting it on a par with the worst nuclear disaster at
Chernobyl, and its warning that the economic damage could be
worse than initially thought.

The failure of U.S. aluminium producer Alcoa Inc to meet
analysts’ revenue forecasts added to investor uncertainty over
the first-quarter earnings.

Heightened risk aversion prompted investors to unwind
carry-trade positions utilising the Japanese yen as a low
interest-rate currency to buy higher yielding assets.

ALCOA Q1 PROFIT TOPS ESTIMATES BUT REVENUE MISSES – REUTERS:
Alcoa Inc (AA.N), the largest U.S. aluminum producer, reported a
first-quarter profit that beat estimates, but its revenue missed
Wall Street’s target and its shares dropped 3 percent in
after-hours trading on Monday.

Revenue in the quarter rose 22 percent to $5.96 billion,
helped by rising prices for aluminum and alumina — the raw
material for the metal — but it lagged the Wall Street forecast
of $6.08 billion. Profit was 28 cents per share versus 27 cents
per share estimate.

Also, Alcoa’s output of alumina, or aluminum oxide, used in
the production of aluminum metal, dipped slightly in the first
quarter to 4.0 million metric tons from 4.2 million in the
fourth quarter of 2010.

The company’s shares, which have risen almost 40 percent in
the last six months, fell 3.4 percent to $17.17 in after-hours
trading on the New York Stock Exchange.

“Alcoa’s had a big run, so I don’t think you’re going to see
a lot of upside from this number,” said Stephen Massocca,
managing director at Wedbush Morgan in San Francisco.

JAPAN RAISES NUCLEAR CRISIS TO SAME LEVEL AS CHERNOBYL –
REUTERS: Japan put its nuclear calamity on a par with the
world’s worst nuclear disaster, Chernobyl, on Tuesday after new
data showed that more radiation leaked from its
earthquake-crippled power plant in the early days of the crisis
than first thought. Two aftershock greater than magnitude 6 hit
Japan again today.

Japanese officials said it had taken time to measure
radiation from the plant after it was smashed by March 11’s
massive quake and tsunami, and the upgrade in its severity
rating to the highest level on a globally recognised scale did
not mean the situation had suddenly become more critical.

“The situation at the Fukushima Daiichi plant is slowly
stabilising, step by step, and the emission of radioactive
substances is on a declining trend,” Prime Minister Naoto Kan
told a press briefing on Tuesday.

He also called on opposition parties, whose help he needs to
pass bills in a divided parliament, to take part in drafting
reconstruction plans from an early stage.

“Our preparations for how to measure (the radiation leakage)
when such a tsunami and earthquake occurred were insufficient
and, as a result, we were late in disseminating information
internationally,” said a senior official in Kan’s office.

Hidehiko Nishiyama, a deputy director-general of the Nuclear
and Industrial Safety Agency (NISA), said the decision to raise
the severity of the incident from level 5 to 7 — the same as
the Chernobyl disaster in Ukraine in 1986 — was based on
cumulative quantities of radiation released.

As another major aftershock rattled the earthquake-ravaged
east of the country a fire broke out at the plant, but engineers
later extinguished the blaze.

However, the operator of the stricken facility appears to be
no closer to restoring cooling systems at the reactors, critical
to lowering the temperature of overheated nuclear fuel rods.

No radiation-linked deaths have been reported since the
earthquake struck, and only 21 plant workers have been affected
by minor radiation sickness, according to Chief Cabinet
Secretary Yukio Edano.

“Although the level has been raised to 7 today, it doesn’t
mean the situation today is worse than it was yesterday, it
means the event as a whole is worse than previously thought,”
said nuclear expert John Price, a former member of the Safety
Policy Unit at the UK’s National Nuclear Corporation.

IFR: US CORP BONDS-Risk wary