European Bond Research – December 3, 2020

GLOBAL MARKETS WERE MIXED TO UP, AS COVID DEATHS AND CASES SPIKED AGAIN. OPEC AND RUSSIA AGREED TO INCREASE PRODUCTION BY 500,000 BARRELS, OIL ENDED AT 45.69. FTSE 100 +0.42%, German DAX -0.45%, CAC 40 -0.15%, STOXX Europe 600 +0.01%.  The 10-year Gilt was DOWN 3.1 bps.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 65.4 MILLION+ CASES AND 1.51 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 0.28% 0.71% 3.28% 2.30% 8.39% 11.14% Mining 0.25% 0.54% 3.53% 0.18% 1.93% 2.98% Manufacturing 0.02% 0.66% 2.47% 3.82% 5.43% 6.18% Transportion, Communication, Electric/Gas -0.10% 0.09% 1.24% 0.94% 4.61% 5.90% Wholesale 0.21% 0.72% 1.98% 2.54% 12.71% 12.47% Retail 1.36% 3.10% 6.16% 19.17% 4.24% 6.60% Finance, Insurance, Real-Estate -0.00% 0.22% 2.41% 3.05% 8.22% 9.68% Services 0.03% 0.56% 3.56% 3.12% 3.41% 6.04% Energy -0.15% 12.68% 20.71% 20.73% -13.00% -20.92%   Total returns (non-annualized) by rating, market weighted.

New Issues

New Issues [Continued]

1. Deutsche Bank AG London (EUR) 0.25% 1/15/2026 (12/01/2020): 1000MM Secured Notes, Price at Issuance 100, Yielding .25%. 2. Deutsche Bank AG London (EUR) 0.25% 1/15/2026 (12/01/2020): 1000MM Secured Notes, Price at Issuance 100, Yielding .25%. 3. UniCredit SpA (EUR) VAR% 1/20/2026 Reg S (12/01/2020): 100MM Senior Non Preferred Notes, Price at Issuance 100. 4. Volkswagen International Finance NV (EUR) 0.05% 6/10/2025 (12/01/2020): 500MM Senior Unsecured Notes. 5. Deutsche Bank AG London (EUR) 0.25% 1/15/2026 (12/01/2020): 1000MM Secured Notes, Price at Issuance 100, Yielding .25%. 6. Acciona Financiacion Filiales SA (EUR) 3% 12/2/2039 (12/01/2020): 120MM Senior Unsecured Notes, Price at Issuance 92.622, Yielding 3.54%. 7. Kommunalbanken AS (USD) 0.25% 12/8/2023 144A (12/01/2020): 1500MM Senior Unsecured Notes. 8. Autostrade per l’Italia SpA (EUR) 2% 12/4/2028 (12/01/2020): 1250MM Senior Unsecured Notes. 9. Banca Monte Dei Paschi di Siena SpA (EUR) 1.875% 1/9/2026 (12/01/2020): 750MM Senior Preferred Security. 10. Molnlycke Holding AB (EUR) 0% 1/15/2031 (12/02/2020): 400MM Senior Unsecured Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 12/03/2020, 135.75 NAV as of 12/03/2020, 101.58 Daily NAV Change (%) +0.03% Daily NAV Change (%) +0.15%

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 –0.508%, as of 12/02/2020.

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