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European Bond Research – July 22, 2020

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

EU MARKETS LOWER AS CORONAVIRUS FLAREUPS TEMPER OPENING THE ECONOMY. STIMULUS IS NEEDED TO HELP BOLSTER EU’S ECONOMIES. FTSE 100 -1.0%, German DAX -0.51%, CAC 40 -1.32%STOXX Europe 600 -0.87%.  The 10-year Gilt was down 1.3 bps.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 15.3 MILLION+ CASES AND 625000+ 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 -0.20% 1.11% 1.80% 8.30% 3.14% 9.68%
Mining 0.03% 0.90% 1.16% 24.65% -3.46% 1.65%
Manufacturing 0.02% 0.37% 3.11% 7.82% -1.09% 0.49%
Transportion, Communication, Electric/Gas -0.05% 0.70% 1.36% 4.84% 2.69% 8.73%
Wholesale -0.60% 0.83% 1.69% 7.99% 1.70% 10.11%
Retail 0.19% 2.96% -5.69% -10.38% -22.07% -13.35%
Finance, Insurance, Real-Estate 0.25% 1.09% 1.08% 8.00% 2.83% 9.12%
Services 0.28% 1.63% 3.03% 8.35% -0.60% 5.51%
Energy -0.66% -0.56% -1.00% 101.74% -16.04% -22.86%
 
Total returns (non-annualized) by rating, market weighted.
Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 42.98, Belgium 17.69. Sovereign wideners (5Y):  Italy 159.61 and Greece 148.47.

New Issuance

New Issues New Issues [Continued]
1. Eurofima (EUR) 0% 7/28/2026 (07/21/2020): 300MM Senior Unsecured Notes, Price at Issuance 101.081.

2. Eurofima (EUR) 0.15% 10/10/2034 (07/21/2020): 250MM Senior Unsecured Notes, Price at Issuance 99.496, Yielding .186%.

3. Azzurra Aeroporti S.P.A. (EUR) 2.625% 5/30/2027 (07/21/2020): 300MM Secured Notes.

4. Azzurra Aeroporti S.P.A. (EUR) 2.125% 5/30/2024 (07/21/2020): 360MM Secured Notes.

5. Purple Protected Asset SA (EUR) FLT% 7/29/2021 (07/21/2020): 1500MM Secured Notes, Price at Issuance 100.

6. UBS Group AG (USD) VAR% PERP (07/22/2020): 750MM Junior Subordinated Notes, Yielding 5.125%.

7. UBS Group AG (USD) VAR% PERP (07/22/2020): 750MM Junior Subordinated Notes, Yielding 5.125%.

8. Raiffeisen Bank Intl. AG (EUR) VAR% PERP (07/22/2020): 500MM Junior Subordinated Notes.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 07/22/2020, 133.17 NAV as of 07/22/2020, 98.73
Daily NAV Change (%) -0.04% Daily NAV Change (%) -0.07%

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 rateEXPECTED TO SOAR.
  • Eurostat’s quarterly GDP: EXPECTED TO CONTRACT.
  • 6-month Euribor: current value –0.353%, as of 07/21/2020.

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