European Bond Research – December 5, 2019

ALTHOUGH CHINA AND THE US SAY TALKS ARE CLOSE TO CREATING PHASE 1 OF A TRADE DEAL, INVESTORS ARE NOT REACTING UNTIL SOMETHING CONCRETE COMES OUT ONE WAY OR ANOTHER. HOUSE IS IN THE PROCESS OF DRAFTING THE ARTICLES OF IMPEACHMENT. FTSE 100 -0.70%, German DAX -0.65%, CAC 40 +0.03%, STOXX Europe 600 -0.03%.  The 10-year Gilt LOST 3.3 basis points.

PRESIDENT TRUMP FORMALLY ASKED THE SUPREME COURT TO REVIEW BOTH THE CONGRESS AND NEW YORK’S REQUEST FOR TAX RETURNS. These requests are based on the President’s former attorney Michael Cohen’s assertions that Trump manipulated his taxes. (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 134.76  and Spain 41.34. Sovereign wideners (5Y):  Finland 11.26 and Portugal 38.48.

New Issues	New Issues [Continued]
1. Societe Generale (EUR) 0% 3/4/2021 (12/04/2019): 80MM Senior Preferred Security, Price at Issuance 100.286, Yielding -.23%. 2. Norwegian Energy Co. AS (USD) 9% 6/17/2026 (12/04/2019): 175MM Senior Unsecured Notes, Price at Issuance 100, Yielding 9%. 3. Wells Fargo & Co. (USD) 0% 12/10/2049 (12/04/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 12/05/2019, 133.9 NAV as of 12/05/2019, 104.54 Daily NAV Change (%) -0.12% Daily NAV Change (%) +0.17%

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 –0.335%, as of 12/04/2019

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