European Bond Research – July 14, 2020

MARKETS MIXED TO LOWER AS CALIFORNIA, HONG KONG, AND OTHER LOCATIONS CLOSE DOWN BUSINESSES IN ORDER TO DEAL  WITH FRESH, SURGING COVID-19 OUTBREAKS. FTSE 100 +0.05%, German DAX -0.8%, CAC 40 -0.96, STOXX Europe 600 -1.01%.  The 10-year Gilt was down 3.5 bps.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 13.3 MILLION+ CASES AND 578000+ DEATHS.  (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 0.74% 1.20% 1.31% 10.91% 2.08% 7.89% Mining -0.01% -0.24% 1.12% 19.67% -0.65% 4.96% Manufacturing 0.23% 0.58% 2.54% 8.42% -2.53% -1.30% Transportion, Communication, Electric/Gas 0.07% 0.24% 0.77% 4.16% 1.92% 8.19% Wholesale -0.36% 0.33% 1.76% 3.78% 1.05% 9.08% Retail -0.17% 0.63% -8.03% -8.81% -24.46% -14.69% Finance, Insurance, Real-Estate 0.11% 0.23% 0.89% 7.60% 2.43% 9.32% Services -0.01% 1.13% 1.12% 8.45% -2.17% 4.02% Energy 0.36% -0.22% 3.51% 103.82% -15.58% -22.23%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 45.09, Belgium 19.52. Sovereign wideners (5Y):  Italy 161.5 and Greece 148.28.

New Issues

New Issues [Continued]

1. AMS AG (EUR) 6% 7/31/2025 (07/13/2020): 200MM Senior Unsecured Notes, Price at Issuance 100.75, Yielding 5.82%. 2. AMS AG (USD) 7% 7/31/2025 (07/13/2020): 50MM Senior Unsecured Notes, Price at Issuance 100.75, Yielding 6.82%. 3. Ultrapar International SA (USD) 5.25% 6/6/2029 (07/13/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.994. 4. Societe Generale (EUR) VAR% 7/17/2031 (07/13/2020): 80MM Senior Non Preferred Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 07/14/2020, 132.59 NAV as of 07/14/2020, 97.40 Daily NAV Change (%) +0.2% Daily NAV Change (%) -0.31%

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 –0.332%, as of 07/13/2020.

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