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European Bond Research – June 8, 2020

Posted on June 8, 2020
June 8, 2020
Bond Markets

COMPANIES ACROSS EUROPE ARE CUTTING JOBS PUTTING DOWNWARD PRESSURE ON MARKETS. STOCKS WERE MOSTLY DOWN. FTSE 100 -0.18%, German DAX -0.22%, CAC 40 -0.43%, STOXX Europe 600 -0.23%.  The 10-year Gilt was down 2.1 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 7.2+ MILLION+ CASES AND 410000+ 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 -0.17% 2.27% 6.53% 1.83% 1.44% 12.78%
Mining 0.50% 1.33% 13.30% -4.85% -4.04% 5.91%
Manufacturing 0.26% 1.08% 2.96% -3.83% -0.84% 2.71%
Transportion, Communication, Electric/Gas 0.00% 0.72% 2.68% 0.94% 1.48% 11.37%
Wholesale 0.40% 1.08% 0.69% -6.25% -1.13% 9.29%
Retail 1.65% 7.41% -4.08% -25.62% -24.69% -13.65%
Finance, Insurance, Real-Estate 0.48% 1.55% 4.46% -1.37% 1.41% 10.91%
Services 0.44% 2.02% 6.81% -0.74% -1.70% 5.22%
Energy 3.42% 8.88% 25.82% -9.08% -21.97% -26.83%
Total returns (non-annualized) by rating, market weighted.
Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 43.76, Belgium 23.41. Sovereign wideners (5Y):  Italy 157.03  and Greece 144.37.

New Issuance

New Issues New Issues [Continued]
1. United Utilities Water (GBP) 2.625% 2/12/2031 (06/08/2020): 75MM Senior Unsecured Notes.

2. OMV AG (EUR) 0% 6/16/2023 (06/08/2020): 750MM Senior Unsecured Notes.

3. OMV AG (EUR) 0.75% 6/16/2030 (06/08/2020): 750MM Senior Unsecured Notes.

4. ACS Actividades de Construccion y Servicios SA (EUR) 1.375% 6/17/2025 (06/08/2020): 750MM Senior Unsecured Notes.

5. ABN AMRO Bank NV (EUR) VAR% PERP (06/08/2020): 1000MM Junior Subordinated Notes, Price at Issuance 100.

6. Societe Generale (EUR) 1.25% 6/12/2030 (06/08/2020): 1000MM Senior Non Preferred Notes.

ADI Indexes


iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 06/08/2020, 132.35 NAV as of 06/08/2020, 99.14
Daily NAV Change (%) -0.46% Daily NAV Change (%) +0.13%

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 –0.196%, as of 06/08/2020.

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