European Bond Research – December 4, 2019

STOCKS WERE UP AS TRUMP ADMINISTRATION STATED THEY ARE CLOSE TO A DEAL. This is a reverse in tone from the President’s Tweet yesterday. FTSE 100 +0.42%, German DAX +1.16%, CAC 40 +1.27%, STOXX Europe 600 +1.18%.  The 10-year Gilt gained 7.6 basis points.

TRUMP LEFT THE NATO SUMMIT EARLY AMID A HOT MICROPHONE MOMENT WHERE OTHER LEADERS WERE CAUGHT MOCKING HIM. Impeachment judiciary committee proceedings proceeded with legal scholars commenting on Trump’s actions. All stated it was a basis of abuse of power charges. (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

LATEST NEWS: Top moves, sovereign tighteners (5Y): Italy 138.99  and Spain 40.97. Sovereign wideners (5Y):  Finland 10.89 and Portugal 38.13.

New Issues	New Issues [Continued]
1. Unione di Banche Italiane SCpA (EUR) VAR% 12/9/2021 (12/03/2019): 64MM Senior Preferred Security, Price at Issuance 100. 2. Sema Lease Uk Limited (GBP) 7% 11/25/2021 (12/03/2019): 75MM Secured Notes. 3. E.ON SE (EUR) 0% 9/29/2022 (12/03/2019): 500MM Senior Unsecured Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 12/04/2019, 134.01 NAV as of 12/04/2019, 104.46 Daily NAV Change (%) -0.04% Daily NAV Change (%) +0.24%

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: currently 7.5% (seasonally adjusted, May 2019)
• Eurostat’s quarterly GDP: 0.4% (2019 Q1)
• 6-month Euribor: current value –0.333%, as of 12/03/2019

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