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European Bond Research – February 4, 2020

Posted on February 4, 2020
EUROPEAN BOND RESEARCH
February 4, 2020
Bond Markets

MARKETS KEPT REBOUNDING FROM LARGE LOSES LAST WEEK DUE TO THE CORONAVIRUS. TESLA’S SHARES ALONG WITH APPLE, AMAZON AND MICROSOFT KEEP SURGING! FTSE 100 +1.42, German DAX +1.66%, CAC 40 +1.49%, STOXX Europe 600 +1.45%.  The 10-year Gilt was up 5.4 bps.

CHINA TO DATE HAS HAD 20600+ CASES AND 430+ DEATHS. INFECTION HAS SPREAD TO OVER 27 COUNTRIES WITH 200+ CONFIRMED CASES. (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,  Telecom Italia Capital SA (USD) 6% 9/30/2034  made some analysts ‘Conviction buy’ lists. (See the chart for Telecom Italia Capital SA bonds below). Pierre Robert

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 44.00, Greece 110.27. Sovereign wideners (5Y):  Finland 10.05 and Ireland 22.04.

New Issuance

New Issues New Issues [Continued]
1. LCPR Senior Secured Financing Designated Activity Company (USD) 6.75% 10/15/2027 144A (02/03/2020): 1200MM First Lien Notes, Price at Issuance 100, Yielding 6.75%.

2. Ziggo (EUR) 2.875% 1/15/2030 (02/03/2020): 77MM Secured Notes, Price at Issuance 100.

3. Federation Des Caisses Desjardins (USD) 2.05% 2/10/2025 Reg S (02/03/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.877, Yielding 2.08%.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 02/04/2020, 134.9 NAV as of 02/04/2020, 105.7
Daily NAV Change (%) -0.04% Daily NAV Change (%) +0.44%

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 –0.338%, as of 02/03/2020.

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