European Bond Research – April 22, 2020

OIL PRICES REBOUNDED SENDING MARKETS UP. OIL FINISHED UP AT 14.23. CASES AND DEATHS ARE ALSO SLOWING DOWN AND MORE COUNTRIES ARE STARTING TO SLOWLY OPEN UP. FTSE 100 +2.3%, German DAX +1.61%, CAC 40 +1.25%, STOXX Europe 600 +1.8%.  The 10-year Gilt was up 2.6 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 2.6 MILLION+ CASES AND 183000+ DEATHS. THE VIRUS SEEMS TO BE DOWN TO A TRICKLE IN CHINA AND EUROPE IS STARTING TO OPEN UP AS CASES START TO GET UNDER CONTROL.   (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 -0.07% 0.75% 17.99% -5.82% -4.79% 7.75% Mining -1.04% -1.45% 3.04% -17.27% -15.73% -8.81% Construction 0.36% 6.60% 10.62% -12.87% -11.56% -8.91% Manufacturing -0.41% 1.07% 13.27% -7.45% -5.13% -2.17% Transportion, Communication, Electric/Gas -1.21% 0.79% 7.40% -12.08% -11.31% -4.17% Wholesale -0.47% 2.31% 2.58% -7.72% -7.14% 3.48% Retail 0.79% 2.74% 4.00% -1.08% 1.66% 14.96% Finance, Insurance, Real-Estate -0.67% -0.48% 8.38% -6.78% -5.58% 4.14% Services -0.50% 1.34% 11.90% -9.36% -8.86% -1.50% Energy 0.89% -2.16% 13.38% -46.37% -44.17% -47.07%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 51.19, Greece 173.3. Sovereign wideners (5Y):  Finland 10.83 and Ireland 45.58.

New Issues

New Issues [Continued]

1. Erste Group Bank AG (EUR) 0% 4/29/2030 (04/22/2020): 50MM Senior Preferred Security. 2. ST Engineering (USD) 1.5% 4/29/2025 (04/22/2020): 750MM Senior Unsecured Notes. 3. Auchan Hldg (EUR) 2.875% 1/29/2026 (04/22/2020): 1000MM Senior Unsecured Notes. 4. Stora Enso Oyj (SEK) 2.375% 4/29/2025 (04/22/2020): 700MM Senior Unsecured Notes. 5. Stora Enso Oyj (SEK) FLT% 4/29/2025 (04/22/2020): 1000MM Senior Unsecured Notes.

6DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 04/22/2020, 128.29 NAV as of 04/22/2020, 92.39 Daily NAV Change (%) +0.56% Daily NAV Change (%) +1.52%

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 –0.178%, as of 04/21/2020.

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