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European Bond Research – December 10, 2019

Posted on December 10, 2019
EUROPEAN BOND RESEARCH
December 10, 2019

Bond Markets


STOCKS FELL DUE AGAIN TO THE FEAR THAT TARIFFS WILL BE LEVIED ON DECEMBER 15TH. The US and China are both hinting that no tariffs will be levied and that in fact some tariffs maybe rescinded. FTSE 100 -0.28%, German DAX -0.27%, CAC 40 +0.18%, STOXX Europe 600 -0.26%.  The 10-year Gilt gained 3.6 basis points.

HOARDING IN BRITAIN IS BEGINING WITH MANY FEELING THERE COULD BE A MAJOR DISRUPTION IN BUYING BASIC GOODS. BORIS JOHNSON IS PUSHING HARD TO GET BREXIT DONE. (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,  ArcelorMittal SA (USD) 6.75% 3/1/2041  made some analysts ‘Conviction buy’ lists. (See the chart for ArcelorMittal SA bonds below). Pierre Robert

Credit-Default Swap Market


LATEST NEWS: Top moves, sovereign tighteners (5Y): Italy 131.87  and Spain 39.75. Sovereign wideners (5Y):  Finland 10.79 and Portugal 37.23.

New Issuance


New Issues New Issues [Continued]
1. Sagax AB (SEK) FLT% 6/16/2023 (12/09/2019): 500MM Senior Unsecured Notes.

2. JAB Holdings BV (EUR) 1% 12/20/2027 (12/09/2019): 750MM Senior Unsecured Notes, Price at Issuance 99.018, Yielding 1.129%.

3. Retail Estates NV (EUR) 2.15% 12/18/2026 (12/10/2019): 75MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.15%.

ADI Indexes


DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 12/10/2019, 134.31 NAV as of 12/10/2019, 104.68
Daily NAV Change (%) +0.08% Daily NAV Change (%) +0.09%

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 ratecurrently 7.5% (seasonally adjusted, May 2019)
  • Eurostat’s quarterly GDP: 0.4% (2019 Q1)
  • 6-month Euribor: current value –0.332%, as of 12/09/2019

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