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European Bond Research – January 15, 2020

Posted on January 15, 2020
January 15, 2020
Bond Markets

STOCKS ARE MIXED TO LOWER AGAIN. SOVEREIGN BONDS ARE LOWER TOO. US MARKETS ARE UP IN ANTICIPATION OF THE US/CHINA PHASE ONE SIGNING.  FTSE 100 +0.03%, German DAX -0.27%, CAC 40 -0.29%, STOXX Europe 600 -0.07%.  The 10-year Gilt was down 7.9 basis points.

TRADE DISPUTE IS BREWING BETWEEN THE EU AND USA NOW THAT PHASE 1 OF CHINA/US IS BEING SIGNED. THE US IS THREATENING TO LEVY $2.4 BILLION IN TARIFFS BECAUSE FRANCE IS CONSIDERING LEVYING A DIGITAL TAX, WHICH THE USA BELIEVES DISPORPORTIONALLY HITS US COMPANIES. (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,  Millicom Intl. Cellular SA (USD) 6% 3/15/2025 Reg S  made some analysts ‘Conviction buy’ lists. (See the chart for Millicom Intl. Cellular SA bonds below). Pierre Robert

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Germany 8.14  and Spain 40.89. Sovereign wideners (5Y):  Finland 10.18 and Ireland 21.61.

New Issuance

New Issues New Issues [Continued]
1. Prosus NV (USD) 3.68% 1/21/2030 144A (01/14/2020): 1250MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.68%.

2. Rede D’Or Finance Sarl (USD) 4.5% 1/22/2030 144A (01/14/2020): 850MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.5%.

3. Deutsche Bank AG (CHF) 0.8% 2/7/2025 (01/14/2020): 200MM Senior Non Preferred Notes, Price at Issuance 100, Yielding .8%.

ADI Indexes


iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 01/15/2020, 134.40 NAV as of 01/15/2020, 105.80
Daily NAV Change (%) +0.22% Daily NAV Change (%) -0.01%

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, May 2019)
  • Eurostat’s quarterly GDP: 0.4% (2019 Q1)
  • 6-month Euribor: current value –0.329%, as of 01/14/2020

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