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European Bond Research – June 16, 2020

Posted on June 16, 2020
EUROPEAN BOND RESEARCH
June 16, 2020
Bond Markets

MARKETS POP AS FED ROLES OUT CORP BOND PURCHASING PROGRAM, PROGRESS ON VACCINE IS MADE, AND RETAIL SALES REBOUND 14% IN THE MONTH OF MAY. FTSE 100 +2.94%, German DAX +3.39%, CAC 40 +2.84%, STOXX Europe 600 +2.92%.  The 10-year Gilt was down 0.2 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 8.2+ MILLION+ CASES AND 443000+ 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 -0.36% -1.76% 3.91% 12.21% 0.42% 10.07%
Mining -0.47% -0.55% 7.36% 5.42% -2.07% 6.79%
Manufacturing -0.15% -0.99% 4.48% 5.73% -0.31% 3.54%
Transportion, Communication, Electric/Gas -0.01% -0.68% 2.43% 4.95% 1.24% 9.55%
Wholesale -0.10% -0.35% 0.16% -3.25% -0.73% 9.34%
Retail 0.18% 9.44% 32.33% -15.36% -17.70% -5.20%
Finance, Insurance, Real-Estate -0.01% -0.35% 3.92% 2.98% 1.51% 10.25%
Services -0.05% -1.24% 5.31% 8.05% -2.88% 3.21%
Energy -1.73% -5.12% 22.86% 94.46% -19.84% -25.06%
 
Total returns (non-annualized) by rating, market weighted.
Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 47.59, Belgium 23.58. Sovereign wideners (5Y):  Italy 201.79 and Greece 148.40.

New Issuance

New Issues New Issues [Continued]
1. Landbk Hessen thueringen (EUR) 0.388% 6/23/2025 (06/15/2020): 100MM Senior Preferred Security.

2. Nexa Resources SA (USD) 6.5% 1/18/2028 144A (06/15/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.254, Yielding 6.63%.

3. Credit Agricole CIB SA (USD) 0.57% 9/18/2021 (06/15/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding .57%.

4. Mediocredito Trentino-Alto Adige SpA (EUR) 1.4% 6/15/2023 (06/15/2020): 150MM Unsecured Notes, Price at Issuance 100, Yielding 1.4%.

5. Deutsche Bank AG (USD) VAR% 6/18/2026 (06/15/2020): 200MM Senior Non Preferred Notes, Price at Issuance 100.

6. Danske Bank AS (USD) 1.226% 6/22/2024 144A (06/16/2020): 1250MM Senior Non Preferred Notes, Price at Issuance 100, Yielding 1.23%.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 06/16/2020, 131.89 NAV as of 06/16/2020, 98.075
Daily NAV Change (%) +0.13% Daily NAV Change (%) +1.11%

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 rateEXPECTED TO SOAR.
  • Eurostat’s quarterly GDP: EXPECTED TO CONTRACT.
  • 6-month Euribor: current value –0.206%, as of 06/15/2020.

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