European Bond Research – June 17, 2020

CONSUMER SPENDING IN THE UNITED STATES HAS REBOUNDED STRONGLY GIVING WORLD MARKETS A BIG BOOST OF CONFIDENCE THAT A “V” SHAPE RECOVERY IS POSSIBLE. FTSE 100 +0.17%, German DAX +0.54%, CAC 40 +0.88%, STOXX Europe 600 +0.7%.  The 10-year Gilt was down 1.5 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 8.35+ MILLION+ CASES AND 448000+ 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% -1.40% 4.46% 14.79% 1.00% 10.68% Mining 0.34% -2.78% 13.11% 7.18% -5.30% 3.32% Manufacturing 0.41% -0.52% 4.30% 9.08% -0.96% 2.39% Transportion, Communication, Electric/Gas 0.22% -0.09% 2.72% 6.65% 1.56% 9.88% Wholesale 0.59% 0.09% 0.72% -2.10% -0.16% 9.95% Retail 1.98% 8.48% 34.94% -13.10% -16.07% -3.33% Finance, Insurance, Real-Estate 0.27% 0.12% 4.15% 5.12% 2.02% 10.40% Services 0.44% -1.32% 6.04% 11.81% -3.73% 4.52% Energy -0.34% -5.30% 22.42% 93.77% -20.11% -25.32%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 48.5, Belgium 23.33. Sovereign wideners (5Y):  Italy 167.87 and Greece 149.35.

New Issues

New Issues [Continued]

1. Cellnex Telecom SAU (EUR) 2.875% 4/18/2025 (06/16/2020): 165MM Senior Unsecured Notes. 2. 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%. 3. Constellium SE (USD) 5.625% 6/15/2028 144A (06/16/2020): 325MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.63%. 4. Cellnex Telecom SAU (EUR) 1.875% 6/26/2029 (06/16/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.077, Yielding 1.988%. 5. Capgemini SA (EUR) 1.125% 6/23/2030 (06/16/2020): 800MM Senior Unsecured Notes, Price at Issuance 99.521, Yielding 1.176%. 6. BNP Paribas (USD) 0% 7/1/2050 (06/17/2020): 50MM Senior Non Preferred Notes, Price at Issuance 100, Yielding 0%. 7. Sparebank 1 Sr BK (NOK) FLT% 6/23/2025 (06/17/2020): 500MM Senior Unsecured Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 06/17/2020, 131.90 NAV as of 06/17/2020, 98.09 Daily NAV Change (%) +0.01% Daily NAV Change (%) +0.02%

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 –0.206%, as of 06/16/2020.

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