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European Bond Research – January 22, 2020

Posted on January 22, 2020
EUROPEAN BOND RESEARCH
January 22, 2020
Bond Markets

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

Credit-Default Swap Market

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 Issuance

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.

ADI Indexes

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 ratecurrently 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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