European Bond Research – December 18, 2020

GLOBAL MARKETS WERE DOWN AS TALKS OVER THE $900 BILLION STIMULUS DEAL WAS BOGGED DOWN CONCERNING FED QA PROGRAM AND DEBT CEILING TALKS.   FTSE 100 -0.30%, German DAX -0.33%, CAC 40 -0.39%, STOXX Europe 600 -0.35%.  The 10-year Gilt was DOWN 3.9 bps.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 76 MILLION+ CASES AND 1.68 MILLION+ DEATHS.  (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,  LYB International Finance BV (USD) 4.875% 3/15/2044 made some analysts ‘Conviction buy’ lists. (See the chart for  LYB International Finance BV bonds below). Pierre Robert

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.35% 0.01% 1.36% 2.68% 8.67% 8.86% Mining 0.23% 0.80% 4.18% 2.86% 3.72% 4.08% Manufacturing -0.02% 0.15% 1.54% 4.82% 5.95% 6.09% Transportion, Communication, Electric/Gas -0.13% -0.30% 0.42% 1.59% 5.13% 5.07% Wholesale 0.11% 0.52% 2.74% 3.91% 14.46% 13.97% Retail 0.80% 0.88% 6.08% 12.34% 5.83% 6.29% Finance, Insurance, Real-Estate 0.02% 0.20% 1.61% 4.12% 9.47% 9.95% Services -0.00% 0.19% 2.37% 5.11% 4.98% 5.50% Energy 0.67% 4.50% 18.45% 58.47% -8.49% -8.41%   Total returns (non-annualized) by rating, market weighted.

New Issues

New Issues [Continued]

1. National Bank of Canada (USD) 0% 12/30/2060 (12/17/2020): 90MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%. 2. Soc Activos Rest Bancaria (EUR) FLT% 12/31/2022 (12/18/2020): 10260MM Senior Unsecured Notes. 3. Cima Finance Dac (USD) 4.5% 7/2/2030 (12/18/2020): 70MM Secured Notes, Price at Issuance 100, Yielding 4.5%. 4. Soc Activos Rest Bancaria (EUR) FLT% 12/31/2022 (12/18/2020): 13542MM Senior Unsecured Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 12/18/2020, 136.19 NAV as of 12/18/2020, 102.02 Daily NAV Change (%) +0.08% Daily NAV Change (%) +0.08%

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 –0.518%, as of 12/17/2020.

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