European Bond Research – April 29, 2020

GDP CONTRACTED BY 4.8%, BUT THE BAD NEWS WAS ECLIPSED BY GILEAD REPORTING THAT REMEDESIVIR WAS SHOWN TO BE AN EFFECTIVE COVID-19 TREATMENT. OIL PRICES ALSO SHOT UP TO 15.19 A BARREL.TSE 100 +2.63%, German DAX +2.89%, CAC 40 +2.22%, STOXX Europe 600 +1.75%.  The 10-year Gilt was down .2 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 3.2+ MILLION+ CASES AND 227000+ 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 -2.44% -3.55% 7.69% -9.15% -8.15% 4.06% Mining 1.32% -1.02% 4.65% -20.02% -18.91% -12.65% Construction -0.63% -1.05% 12.87% -13.62% -12.58% -10.01% Manufacturing 0.01% -0.87% 9.36% -7.68% -5.52% -2.54% Transportion, Communication, Electric/Gas -0.50% -0.85% -0.25% -10.94% -10.69% -3.69% Wholesale 1.37% 1.39% 9.50% -6.84% -5.79% 5.15% Retail 1.75% 0.19% 5.77% -2.39% 1.67% 13.44% Finance, Insurance, Real-Estate 0.34% 0.35% 4.85% -6.86% -5.38% 4.19% Services -0.03% -0.24% 10.66% -9.53% -9.21% 0.01% Energy 2.88% 1.60% 42.07% -34.52% -34.54% -38.59%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 49.25, Israel 70. Sovereign wideners (5Y):  Italy 215  and Mexico 311.

New Issues

New Issues [Continued]

1. ASML Holding NV (EUR) 0.625% 5/7/2029 (04/28/2020): 750MM Senior Unsecured Notes. 2. Amphenol Techs Hldg GmbH (EUR) 0.75% 5/4/2026 (04/28/2020): 500MM Senior Unsecured Notes. 3. Lukoil (USD) 3.875% 5/6/2030 144A (04/28/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%. 4. Banco Votorantim (USD) 1.86% 7/30/2020 (04/28/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.86%. 5. CRH Finance BV (EUR) 1.625% 5/5/2030 (04/28/2020): 750MM Senior Unsecured Notes. 6. DZ Bank AG (EUR) 0.235% 6/28/2023 (04/28/2020): 150MM Senior Preferred Security, Price at Issuance 100, Yielding .24%. 7. Secil Cia Geral de Cal (EUR) 1.173% 4/29/2027 (04/29/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.17%. 8. NXP BV (USD) 3.15% 5/1/2027 144A (04/29/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.801, Yielding 3.18%. 9. NXP BV (USD) 2.7% 5/1/2025 144A (04/29/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.916, Yielding 2.72%. 10. NXP BV (USD) 3.4% 5/1/2030 144A (04/29/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.748, Yielding 3.43%.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 04/29/2020, 129.64 NAV as of 04/29/2020, 92.96 Daily NAV Change (%) +0.17% Daily NAV Change (%) -0.1%

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 –0.163%, as of 04/28/2020.

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