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European Bond Research – February 6, 2020

Posted on February 6, 2020
EUROPEAN BOND RESEARCH
February 6, 2020
Bond Markets

MARKETS CONTINUE THEIR UPWARD TREND! MARKETS SHRUG OFF THE CORONAVIRUS AND BELIEVE TRUMP’S ACQUITTAL WILL ONLY FUEL THE MARKET’S UPWARD CLIMB. FTSE 100 +0.41, German DAX +0.59%, CAC 40 +0.81%, STOXX Europe 600 +0.41%.  The 10-year Gilt was down 2.1 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 28000+ CASES AND 600+ DEATHS. INFECTION HAS SPREAD TO OVER 25 COUNTRIES WITH 500+ 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,  Intelsat Luxembourg SA (USD) 7.75% 6/1/2021 made some analysts ‘Conviction buy’ lists. (See the chart for Intelsat bonds below). Pierre Robert

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 33.24, Greece 99.26. Sovereign wideners (5Y):  Finland 8.00 and Ireland 21.40.

New Issuance

New Issues New Issues [Continued]
1. Comcast Corp. (GBP) 1.875% 2/20/2036 (02/05/2020): 800MM Senior Unsecured Notes, Price at Issuance 99.232, Yielding 1.922%.

2. Comcast Corp. (USD) 1.5% 2/20/2029 (02/05/2020): 600MM Senior Unsecured Notes.

3. Comcast Corp. (USD) 0.75% 2/20/2032 (02/05/2020): 1400MM Senior Unsecured Notes, Price at Issuance 99.84, Yielding .764%.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 02/06/2020, 134.76 NAV as of 02/06/2020, 105.99
Daily NAV Change (%) -0.16% Daily NAV Change (%) +0.14%

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 –0.346%, as of 02/05/2020.

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