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European Bond Research – February 24, 2020

Posted on February 24, 2020
EUROPEAN BOND RESEARCH
February 24, 2020
Bond Markets

MULTIPLE COMPANIES HAVE COME OUT, FROM COCA-COLA TO APPLE, THAT THE CORONAVIRUS WILL AFFECT THEIR EARNINGS. ADVISORSHARES CEO HAS WARNED THAT THE TOP OF THE MARKET HAS OCCURRED.   FTSE 100 -3.34, German DAX -4.01%, CAC 40 -3.94%, STOXX Europe 600 -3.79%.  The 10-year Gilt was down 5.3 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 77000+ CASES AND 3000+ DEATHS. THE VIRUS SEEMS TO BE SLOWING DOWN AS NEW CASES AND DEATHS SEEM TO BE ACCELERATING INTERNATIONALLY.   (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,  Bombardier Inc. (USD) 7.5% 12/1/2024 Reg S made some analysts ‘Conviction buy’ lists. (See the chart for Bombardier Inc. bonds below). Pierre Robert

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 38.96, Greece 111.64. Sovereign wideners (5Y):  Finland 9.7 and Ireland 19.97.

New Issuance

New Issues New Issues [Continued]
1. Intesa Sanpaolo SPA (EUR) VAR% PERP (02/20/2020): 750MM Junior Subordinated Notes, Price at Issuance 100.

2. Credit Agricole CIB SA (USD) 2.65% 3/6/2030 (02/21/2020): 65MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.65%.

3. Banco Santander SA (EUR) 0.1% 2/27/2032 (02/21/2020): 1250MM Secured Notes.

4. Terega Sasu (EUR) 0.625% 2/27/2028 (02/21/2020): 400MM Senior Unsecured Notes.

5. Single Platform Inv Repackaging Entity SA (EUR) 0.86% 2/15/2040 (02/21/2020): 50MM Secured Notes, Price at Issuance 100, Yielding .86%.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 02/24/2020, 135.33 NAV as of 02/24/2020, 105.33
Daily NAV Change (%) -0.86% Daily NAV Change (%) -0.86%

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 ratecurrently 7.5% (seasonally adjusted, November 2019)
  • Eurostat’s quarterly GDP: 0.4% (2019 Q4)
  • 6-month Euribor: current value –0.356%, as of 02/21/2020.

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