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European Bond Research – June 9, 2020

Posted on June 9, 2020
EUROPEAN BOND RESEARCH
June 9, 2020
Bond Markets

EUROPE LOWER AGAIN AS EXPORTS, INCOME, AND SPENDING CONTRACT BY 3.6% FOR THE FIRST QUARTER. GERMAN AND FRENCH EXPORTS CONTRACT BADLY. GLOBAL AIRLINES HEADED FOR $100 BILLION LOSS FOR 2020. FTSE 100 2.1%, German DAX -1.57%, CAC 40 -1.57%, STOXX Europe 600 -1.22%.  The 10-year Gilt was up .1 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 7.3+ MILLION+ CASES AND 411000+ 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 0.02% 2.50% 5.68% 2.50% 1.76% 13.55%
Mining 1.02% 1.20% 13.37% -2.31% -1.82% 7.65%
Manufacturing 0.36% 1.91% 4.09% -1.09% 1.24% 5.68%
Transportion, Communication, Electric/Gas 0.06% 0.86% 2.91% 1.36% 1.93% 11.41%
Wholesale 0.65% 1.78% 1.23% -5.70% -0.45% 9.97%
Retail -0.17% 7.42% 6.71% -25.16% -24.79% -13.42%
Finance, Insurance, Real-Estate 0.28% 1.89% 4.63% -0.71% 1.89% 10.90%
Services 0.24% 2.03% 5.48% 0.62% -1.52% 4.61%
Energy 5.07% 12.06% 34.18% -3.10% -16.94% -22.06%
 
Total returns (non-annualized) by rating, market weighted.
Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 43.90, Belgium 24.24. Sovereign wideners (5Y):  Italy 155.73 and Greece 143.37.

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, Price at Issuance 99.584, Yielding .139%.

3. OMV AG (EUR) 0.75% 6/16/2030 (06/08/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.493, Yielding .803%.

4. ACS Actividades de Construccion y Servicios SA (EUR) 1.375% 6/17/2025 (06/08/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.947, Yielding 1.386%.

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, Price at Issuance 99.478, Yielding 1.306%.

7. PPF Telecom Group BV (EUR) 3.5% 5/20/2024 (06/09/2020): 100MM Senior Unsecured Notes.

8. UniCredit SpA (EUR) VAR% 6/16/2026 (06/09/2020): 1250MM Senior Preferred Security.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 06/09/2020, 132.72 NAV as of 06/09/2020, 98.1
Daily NAV Change (%) -0.48% Daily NAV Change (%)-1.05%

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 –0.195%, as of 06/08/2020.

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