European Bond Research – July 1, 2020

PFIZER REPORTED PROGRESS ON ITS VACCINE LIFTING MARKETS FOR THE MOST PART. PAYROLL NUMBERS, UNEMPLOYMENT NUMBERS, RISING MANUFACTURING GAUGE AND RISING COVID CASES PAINTS A CLOUDY PICTURE FOR MARKETS   FTSE 100 -0.19%, German DAX -0.41%, CAC 40 -0.19, STOXX Europe 600 +0.19%.  The 10-year Gilt was up 3.7 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 10.7+ MILLION+ CASES AND 517000+ DEATHS. THE VIRUS SEEMS TO BE DOWN TO A TRICKLE IN CHINA AND EUROPE IS STARTING TO OPEN UP AS CASES START TO GET UNDER CONTROL.   (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,  LYB International Finance BV (USD) 4.875% 3/15/2044 made some analysts ‘Conviction buy’ lists. (See the chart for  LYB International Finance BV bonds below). Pierre Robert

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing -0.17% -0.65% 1.17% 17.79% 0.48% 6.42% Mining 0.01% 1.35% 9.36% 26.43% -1.16% 5.09% Manufacturing 0.00% -0.14% 2.78% 16.71% -1.56% 1.23% Transportion, Communication, Electric/Gas -0.07% -0.59% 0.45% 7.96% 1.24% 7.95% Wholesale -0.15% 0.37% 2.52% 14.34% 0.41% 9.78% Retail -0.89% -9.59% 6.38% -11.51% -25.40% -13.32% Finance, Insurance, Real-Estate -0.04% -0.28% 1.92% 10.74% 1.85% 8.60% Services -0.14% -0.43% 0.81% 15.96% -4.16% 3.78% Energy 0.02% -0.55% 17.51% 189.90% -15.78% -22.04%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 50.25, Belgium 21.07. Sovereign wideners (5Y):  Italy 164.64 and Greece 143.4.

New Issues

New Issues [Continued]

1. Takeda Pharmaceutical Co. LTD (EUR) 0.75% 7/9/2027 (06/29/2020): 750MM Senior Unsecured Notes. 2. Takeda Pharmaceutical Co. LTD (EUR) 1% 7/9/2029 (06/29/2020): 850MM Senior Unsecured Notes. 3. Takeda Pharmaceutical Co. LTD (EUR) 1.375% 7/9/2032 (06/29/2020): 1000MM Senior Unsecured Notes. 4. Takeda Pharmaceutical Co. LTD (EUR) 2% 7/9/2040 (06/29/2020): 1000MM Senior Unsecured Notes. 5. Henkel AG & Co. KGaA (USD) 1.042% 7/7/2025 (06/29/2020): 70MM Senior Unsecured Notes. 6. Nykredit Realkredit AS (NOK) FLT% 7/7/2025 (06/29/2020): 1750MM Senior Non Preferred Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 07/01/2020, 131.79 NAV as of 07/01/2020, 97.49 Daily NAV Change (%) -0.33% Daily NAV Change (%) +0.11%

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: EXPECTED TO SOAR.
• Eurostat’s quarterly GDP: EXPECTED TO CONTRACT.
• 6-month Euribor: current value –0.308%, as of 07/01/2020.

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