European Bond Research – January 15, 2020

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

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 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%.

DATA CHECK:

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%

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 –0.329%, as of 01/14/2020

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