European Bond Research – April 15, 2020

MARKETS ROUTED AS RETAIL NUMBERS SHOW AN 8.7% DECLINE FOR THE MONTH OF MARCH. STORES, GASOLINE STATIONS, RESTAURANTS, BARS AND ONLINE SHOPPING WERE ALL VERY NEGATIVELY AFFECTED. APRIL IS EXPECTED TO BE FAR WORSE. FTSE 100 -3.44%, German DAX -3.9%, CAC 40 -2.76%, STOXX Europe 600-3.25%.  The 10-year Gilt was down 3.6 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 2.1 MILLION+ CASES AND 130000+ DEATHS. THE VIRUS SEEMS TO BE DOWN TO A TRICKLE IN CHINA AS NEW CASES AND DEATHS SEEM TO BE ACCELERATING INTERNATIONALLY.   (Advantage Data Inc.). Extensive corporate-bond index data showed a net daily grade increment for high-grade versus high-yield constituents. High-yield bonds edged out high-grade debt as of 3 PM, London time.  Among European high-yield bonds showing a concurrence of top price gains at appreciable volumes traded,  Mylan Inc. (USD) 3.75% 12/15/2020 made some analysts ‘Conviction buy’ lists. (See the chart for  Mylan Inc. bonds below). Pierre Robert

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 2.69% 6.39% 5.70% -6.68% -5.54% 6.17% Mining 1.10% 3.34% -11.01% -19.96% -18.50% -8.53% Construction 0.85% 5.00% -16.87% -17.98% -16.97% -14.63% Manufacturing 0.76% 4.43% -2.28% -5.29% -4.22% -1.96% Transportion, Communication, Electric/Gas -0.86% 3.54% -4.00% -10.19% -9.29% -1.63% Wholesale 0.07% 2.17% -7.89% -9.36% -9.00% 1.57% Retail 0.64% 1.46% -6.96% -2.42% -0.90% 13.10% Finance, Insurance, Real-Estate 1.26% 3.62% -2.55% -5.96% -4.93% 3.99% Services 1.04% 7.45% -0.58% -10.93% -10.39% 0.17% Energy 0.44% 0.60% -10.62% -44.95% -43.25% -46.24%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 49.51, Greece 235.9. Sovereign wideners (5Y):  Finland 21 and Ireland 41.41.

New Issues

New Issues [Continued]

1. UBS AG London (USD) 1.75% 4/21/2022 Reg S (04/14/2020): 2500MM Senior Unsecured Notes, Price at Issuance 99.869, Yielding 1.82%. 2. Credit Agricole SA (EUR) 1% 4/22/2026 (04/14/2020): 1500MM Senior Non Preferred Notes, Price at Issuance 99.942, Yielding 1.012%. 3. Bank fuer Tirol und Vorarlberg AG (EUR) 0.9% 5/27/2026 (04/14/2020): 650MM Senior Non Preferred Notes, Price at Issuance 100, Yielding .9%. 4. Henkel AG & Co. KGaA (CHF) 0.273% 4/28/2023 (04/14/2020): 330MM Senior Unsecured Notes. 5. UBS AG London (EUR) 0.75% 4/21/2023 (04/14/2020): 2000MM Senior Unsecured Notes. 6. Daimler Canada Finance (NOK) 3.1% 4/21/2025 (04/14/2020): 550MM Senior Unsecured Notes. 7. Barclays Bank PLC (USD) FLT% 4/21/2023 (04/15/2020): 90MM Senior Unsecured Notes, Price at Issuance 100. 8. BMW Finance NV (NOK) FLT% 4/21/2023 (04/15/2020): 1230MM Senior Unsecured Notes. 9. Societe Generale (EUR) 1.125% 4/21/2026 (04/15/2020): 750MM Senior Non Preferred Notes. 10. American Honda Finance Corp. (EUR) 1.6% 4/20/2022 (04/15/2020): 500MM Senior Unsecured Notes.

6DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 04/15/2020, 128.23 NAV as of 04/15/2020, 94.64 Daily NAV Change (%) -0.35% Daily NAV Change (%) +1.95%

OVERALL EUROPEAN CREDIT MARKET:
The euro-zone economy shows signs of negative momentum, weakening credit rating quality, and uncertainty regarding the outcome of Brexit. Closely watched indicators and rates:

• Eurostat’s unemployment rate: EXPECTED TO SOAR.
• Eurostat’s quarterly GDP: EXPECTED TO CONTRACT.
• 6-month Euribor: current value –0.195%, as of 04/14/2020.

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