European Bond Research – July 24, 2020

MARKETS DOWN AFTER A LOUSY WEEK OF POOR EARNINGS, RISING UNEMPLOYMENT, SURGING CORONAVIRUS GLOBALLY. FTSE 100 -1.4%, German DAX -2.02%, CAC 40 -1.54%, STOXX Europe 600 -1.7%.  The 10-year Gilt was up 2.1 bps.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 15.9 MILLION+ CASES AND 640000+ 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 0.75% 1.37% 2.86% 9.37% 4.00% 10.86% Mining 0.02% 0.43% 1.13% 17.08% -0.10% 5.27% Manufacturing 0.12% 0.75% 1.75% 10.58% 0.77% 3.25% Transportion, Communication, Electric/Gas -0.00% 0.64% 1.47% 5.36% 2.96% 8.91% Wholesale 0.23% 0.60% 1.92% 8.29% 1.93% 10.12% Retail -0.51% 1.34% -6.52% -11.18% -22.88% -14.13% Finance, Insurance, Real-Estate 0.06% 0.92% 1.27% 8.14% 3.43% 9.85% Services -0.11% 1.64% 3.33% 9.80% -1.13% 5.82% Energy -0.15% -0.56% -0.67% 105.58% -15.89% -22.63%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 44.28, Belgium 16.62. Sovereign wideners (5Y):  Italy 151.87 and Greece 153.91.

New Issues

New Issues [Continued]

1. UBS Group AG (USD) VAR% PERP (07/22/2020): 750MM Junior Subordinated Notes, Price at Issuance 100, Yielding 5.125%. 2. UBS Group AG (USD) VAR% PERP (07/22/2020): 750MM Junior Subordinated Notes, Price at Issuance 100, Yielding 5.125%. 3. Raiffeisen Bank Intl. AG (EUR) VAR% PERP (07/22/2020): 500MM Junior Subordinated Notes, Price at Issuance 100. 4. Swedish Export Credit (USD) 0.375% 7/30/2024 (07/23/2020): 600MM Unsecured Notes. 5. BNG Bank NV (EUR) 0.68% 3/4/2050 (07/23/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding .68%.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 07/24/2020, 132.96 NAV as of 07/24/2020, 98.79 Daily NAV Change (%) -0.14% Daily NAV Change (%) -0.24%

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 –0.373%, as of 07/23/2020.

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