European Bond Research – June 5, 2020

2.5 MILLION JOBS WERE UNEXPECTEDLY CREATED IN MAY CAUSING MARKETS TO LEAP! OIL LEAPS TO ALMOST $40 A BARREL. ECB PUMPING MORE MONEY INTO THE ECONOMY TO HELP SUPPORT BUSINESSES. FTSE 100 +2.25%, German DAX +3.36%, CAC 40 +3.71%, STOXX Europe 600 +2.45%.  The 10-year Gilt was up 4.9 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 6.8+ MILLION+ CASES AND 395000+ 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,  Barclays PLC (USD) 5.25% 5/27/2023 made some analysts ‘Conviction buy’ lists. (See the chart for  Barclays PLC bonds below). Pierre Robert

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.73% 1.99% 6.44% 1.02% 1.18% 13.15% Mining 1.06% 2.68% 18.58% -7.73% -7.43% 2.00% Manufacturing 0.09% 0.99% 3.04% -4.44% -1.69% 2.00% Transportion, Communication, Electric/Gas -0.16% 0.47% 2.74% 0.42% 1.36% 11.49% Wholesale -0.54% 1.43% -0.23% -5.59% -1.54% 8.91% Retail 0.56% 12.65% -9.38% -26.80% -26.18% -14.98% Finance, Insurance, Real-Estate 0.21% 1.32% 4.34% -2.67% 0.01% 9.48% Services 0.10% 1.75% 5.85% -1.30% -2.14% 5.17% Energy 1.75% 3.45% 22.58% -11.80% -24.69% -29.38%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 48.03, Belgium 25.10. Sovereign wideners (5Y):  Italy 161.42  and Greece 154.32.

New Issues

New Issues [Continued]

1. Deutsche Bank AG (JPY) 1.1% 6/23/2023 (06/04/2020): 5700MM Senior Non Preferred Notes, Price at Issuance 100, Yielding 1.1%. 2. Sato-OYJ (EUR) 2.45% 6/12/2030 (06/04/2020): 50MM Senior Unsecured Notes. 3. Swedbank AB (EUR) 0.25% 6/12/2023 (06/04/2020): 50MM Senior Unsecured Notes. 4. Ellevio AB (SEK) 1.728% 6/11/2027 (06/04/2020): 1000MM Senior Unsecured Notes. 5. Ellevio AB (SEK) FLT% 6/11/2027 (06/04/2020): 650MM Senior Unsecured Notes, Price at Issuance 100. 6. Stora Enso Oyj (SEK) FLT% 4/29/2025 (06/04/2020): 550MM Senior Unsecured Notes. 7. Sitex Properties AG (CHF) 0.375% 6/17/2025 (06/04/2020): 50MM Senior Unsecured Notes, Price at Issuance 100.099, Yielding .36%. 8. Credit Mutuel Arkea (EUR) VAR% 6/11/2029 (06/04/2020): 750MM Senior Non Preferred Notes. 9. Zurich Finance (Australia) Ltd (AUD) 4.5% 7/26/2038 (06/05/2020): 125MM Senior Unsecured Notes. 10. Lloyds Bank Corporate Markets PLC (JPY) 0.8% 6/16/2025 (06/05/2020): 8400MM Senior Unsecured Notes, Price at Issuance 100, Yielding .8%.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 06/05/2020, 132.96 NAV as of 06/05/2020, 99.01 Daily NAV Change (%) +0.93% Daily NAV Change (%) +1.12%

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 –0.179%, as of 06/05/2020.

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