European Bond Research – April 6, 2020

MARKETS ARE WAY UP BECAUSE MULTIPLE COUNTRIES ARE REACHING THE APEX FOR CASES AND DEATHS FOR THE VIRUS OUTBREAK. FTSE 100 +3.08%, German DAX +5.77%, CAC 40 +4.61%, STOXX Europe 600 +3.78%.  The 10-year Gilt was up 1.9 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 1290000+ CASES AND 70000+ 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 0.47% 4.15% -11.06% -11.96% -11.21% 1.90% Mining -0.24% -4.68% -22.16% -21.93% -21.75% -11.83% Construction -0.74% 0.76% -23.98% -22.28% -22.00% -18.40% Manufacturing -0.14% 0.52% -14.23% -10.75% -10.58% -6.24% Transportion, Communication, Electric/Gas -0.99% -3.01% -12.79% -12.95% -12.72% -3.66% Wholesale -0.06% 1.18% -14.45% -12.58% -12.52% -1.92% Retail 0.67% 1.51% -11.22% -3.06% -2.68% 12.16% Finance, Insurance, Real-Estate -0.13% 0.54% -10.59% -8.96% -8.68% 1.28% Services 0.03% 3.00% -14.23% -15.05% -14.98% -5.86% Energy 8.33% -12.12% -51.20% -53.12% -53.17% -54.73%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 60.07, Greece 237. Sovereign wideners (5Y):  Finland 10.83 and Ireland 22.72.

New Issues

New Issues [Continued]

1. Scania CV AB (SEK) FLT% 4/17/2025 (04/06/2020): 600MM Senior Unsecured Notes. 2. Caisse Centrale du Credit Immobilier de France SA (EUR) 0.05% 3/25/2025 (04/06/2020): 500MM Senior Unsecured Notes. 3. Sanofi (EUR) 1% 4/1/2025 (04/06/2020): 250MM Senior Unsecured Notes. 4. Sanofi (EUR) 1.5% 4/1/2030 (04/06/2020): 250MM Senior Unsecured Notes. 5. Holcim Finance Luxembourg SA (EUR) 2.375% 4/9/2025 (04/06/2020): 500MM Senior Unsecured Notes. 6. Stora Enso Oyj (EUR) 2.5% 6/7/2027 (04/06/2020): 300MM Senior Unsecured Notes. 7. Autostrade per l’Italia SpA (EUR) 1.625% 6/12/2023 (04/06/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.25, Yielding 1.87%. 8. Repsol International Finance BV (EUR) 2% 12/15/2025 (04/06/2020): 750MM Senior Unsecured Notes. 9. Repsol International Finance BV (EUR) 2.625% 4/15/2030 (04/06/2020): 750MM Senior Unsecured Notes. 10. Svenska Handelsbanken AB (EUR) 1% 4/15/2025 (04/06/2020): 1250MM Senior Preferred Security.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 04/6/2020, 125.46 NAV as of 04/6/2020, 87.91 Daily NAV Change (%) +0.47% Daily NAV Change (%) +1.85%

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 –0.277%, as of 04/3/2020.

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