European Bond Research – January 22, 2020

BREXIT AND CHINA FLU OUTBREAK ARE WAYING ON THE MARKETS. SOVEREIGN BONDS ACROSS EUROPE WERE LOWER FOR THE MOST PART.  FTSE 100 -0.51%, German DAX -0.01%, CAC 40 -0.22%, STOXX Europe 600 +0.16%. The 10-year Gilt was down 0.1 basis points.

BREXIT AMENDMENTS FROM THE HOUSE OF LORDS WERE OVERTURNED. BORIS JOHNSON SETTING UP JANUARY 31ST BREXIT. (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): China 32.68 and Greece 121.5. Sovereign wideners (5Y):  Finland 10.61 and Ireland 22.42.

New Issues	New Issues [Continued]
1. Ardshinbank CJSC (USD) 6.5% 1/28/2025 144A (01/21/2020): 300MM Senior Unsecured Notes, Price at Issuance 100. 2. Nationwide Building Society (USD) 2% 1/27/2023 144A (01/21/2020): 1000MM Senior Preferred Security, Price at Issuance 99.855, Yielding 2.05%. 3. Jyske Bank A/S (EUR) 1.25% 1/28/2031 (01/21/2020): 200MM Subordinated Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 01/21/2020, 134.27 NAV as of 01/22/2020, 105.96 Daily NAV Change (%) -0.01% Daily NAV Change (%) -0.08%

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 –0.334%, as of 01/21/2020

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