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European Bond Research – December 3, 2019

Posted on December 3, 2019
December 3, 2019

Bond Markets

STOCKS AND SOVEREIGN BOND YIELDS FELL IN RESPONSE TO TRUMP SUGGESTING THERE MIGHT NOT BE A PHASE 1 CHINA/US DEAL SIGNED BEFORE THE 2020 ELECTION. Corporate bond was up as investors pile into investment-grade bonds. FTSE 100 -1.61%, German DAX +0.29%, CAC 40 -0.97%, STOXX Europe 600 -0.58%.  The 10-year Gilt lost 0.7 basis points.

THE TRUMP ADMINISTRATION LOOKS TO PUSH AHEAD ON NEW TARIFFS ON OVER $150 BILLION OF GOODS SOLD TO THE UNITED STATES. Trump also levied tariffs on Argentina and Brazillian steel and aluminum. Trump also wants to levy $2.5 billion in tariffs on French goods because of France’s Tech tax. Trump is exploring similar tariffs on Poland, Italy and Belgium because they too are exploring a tech tax. (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): Greece 151.67 and Ireland 24.06. Sovereign wideners (5Y):  Finland 11.23 and Portugal 37.80.

New Issuance

New Issues New Issues [Continued]
1. Italgas S.P.A. (EUR) 1% 12/11/2031 (12/02/2019): 500MM Senior Unsecured Notes, Price at Issuance 99.271, Yielding 1.065%.

2. Mediobanca Di Credito Finanz SpA (EUR) 0.875% 1/15/2026 (12/02/2019): 500MM Senior Unsecured Notes, Price at Issuance 99.81, Yielding .907%.

3. Unione di Banche Italiane SCpA (EUR) VAR% 12/9/2021 (12/03/2019): 64MM Senior Preferred Security, Price at Issuance 100.

ADI Indexes


iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 12/03/2019, 134.18 NAV as of 12/03/2019, 104.21
Daily NAV Change (%) +0.21% Daily NAV Change (%) -0.16%

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 –0.345%, as of 12/02/2019

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