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European Bond Research – April 3, 2020

Posted on April 3, 2020
EUROPEAN BOND RESEARCH
April 3, 2020
Bond Markets

MARKETS ARE DOWN AS VIRUS CASE AND DEATH COUNTS CONTINUE TO RISE. JOB LOSES CONTINUE TO PILE ON AS THE US REPORTS 700k JOB PAYROLL DIVE.  FTSE 100 -1.16%, German DAX -0.16%, CAC 40 -1.22%, STOXX Europe 600 -0.88%.  The 10-year Gilt was down 1.5 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 1060000+ CASES AND 55000+ 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 0.64% 5.33% -10.90% -11.99% -11.62% 1.32%
Mining -1.04% 1.13% -23.38% -22.89% -22.80% -12.36%
Construction -0.39% 1.44% -23.58% -22.29% -22.06% -18.36%
Manufacturing -0.20% 2.18% -14.43% -11.28% -11.21% -6.79%
Transportion, Communication, Electric/Gas -1.32% -2.40% -14.48% -15.18% -14.98% -6.87%
Wholesale 0.16% 1.34% -14.37% -12.35% -12.46% -1.67%
Retail -0.75% 1.59% -10.75% -3.49% -3.29% 11.44%
Finance, Insurance, Real-Estate -0.11% 1.03% -10.64% -9.38% -9.15% 0.80%
Services -0.28% 4.40% -15.43% -16.52% -16.49% -2.94%
Energy -16.65% -21.48% -53.64% -55.10% -55.29% -56.76%
 
Total returns (non-annualized) by rating, market weighted.
Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 59.10, Greece 173.31. Sovereign wideners (5Y):  Finland 10.83 and Ireland 32.07.

New Issuance

New Issues New Issues [Continued]
1. Raiffeisen Bank Intl. AG (USD) 0% 4/24/2025 (04/02/2020): 50MM Senior Unsecured Notes, Price at Issuance 93.9745.

2. LafargeHolcim Finance US LLC (CHF) 1.05% 4/11/2022 (04/02/2020): 250MM Senior Unsecured Notes, Price at Issuance 100.02, Yielding 1.04%.

3. Raiffeisen-Landesbank Tirol AG (EUR) FLT% 4/8/2025 (04/02/2020): 200MM Senior Unsecured Notes, Price at Issuance 100.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 04/3/2020, 125.05 NAV as of 04/3/2020, 87.39
Daily NAV Change (%) +0.18% Daily NAV Change (%) -0.10%

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 rateEXPECTED TO SOAR.
  • Eurostat’s quarterly GDP: EXPECTED TO CONTRACT.
  • 6-month Euribor: current value –0.268%, as of 04/2/2020.

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