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European Bond Research – January 8, 2020

Posted on January 8, 2020
EUROPEAN BOND RESEARCH
January 8, 2020

Bond Markets


AFTER IRANIAN ATTACK, TRUMP CLAIMS THAT IRAN WILL STEP DOWN FROM A FULL CONFRONTATION. Markets are reacting in a way that suggests the confrontation is over. FTSE 100 +0.01%, German DAX +0.71%, CAC 40 +0.31%, STOXX Europe 600 +0.17%.  The 10-year Gilt gained 3 basis points.

IRAN’S SUPREME LEADER SUGGESTED OTHERWISE. The missle attack was only a “slap” and that more was coming. Iran wants the US out of Iraq.  (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,  Deutsche Bank AG (USD) 4.5% 4/1/2025  made some analysts ‘Conviction buy’ lists. (See the chart for Deutsche Bank AG bonds below). Pierre Robert

Credit-Default Swap Market


LATEST NEWS: Top moves, sovereign tighteners (5Y): Italy 128.80 and Spain 41.01. Sovereign wideners (5Y):  Finland 10.34 and Ireland 21.83.

New Issuance


New Issues New Issues [Continued]
1. Allianz Finance II (EUR) 0.5% 1/14/2031 (01/07/2020): 750MM Senior Unsecured Notes.

2. BNP Paribas (GBP) 1.875% 12/14/2027 (01/07/2020): 850MM Senior Non Preferred Notes.

3. BNP Paribas (USD) 3.052% 1/13/2031 Reg S (01/07/2020): 2000MM Senior Non Preferred Notes, Price at Issuance 100, Yielding 3.05%.

ADI Indexes


DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 01/08/2020, 134.44 NAV as of 01/08/2020, 105.63
Daily NAV Change (%) -0.14% 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 –0.323%, as of 01/07/2020

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