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European Bond Research – January 9, 2020

Posted on January 9, 2020
January 8, 2020

Bond Markets

STOCK MARKETS RALLIED TO FRESH HIGHS AS THE CONFLICT WITH IRAN SEEMED TO PULL BACK FROM CONFRONTATION. FTSE 100 +0.31%, German DAX +1.31%, CAC 40 +0.19%, STOXX Europe 600 +0.31%. The 10-year Gilt was unchanged.

A NUMBER OF ANALYST HAVE STATED THAT THESE NEW HIGHS HAVE ONLY A BASIS IN A CONFLICT BEING AVERTED. They feel the markets are too frothy and warn of a correction. (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 129.04 and Spain 40.85. 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


iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 01/09/2020, 134.31 NAV as of 01/09/2020, 105.91
Daily NAV Change (%) -0.1% Daily NAV Change (%) +0.28%

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 –0.332%, as of 01/08/2020

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