European Bond Research – March 23, 2020

MORE US STATES SHUTDOWN AS CLAMPDOWN IS GEARED TO SLOW DOWN AND MITIGATE THE CORONA VIRUS NATIONWIDE. FTSE 100 -3.76%, German DAX -2.1%, CAC 40 -3.32%, STOXX Europe 600 -4.3%.  The 10-year Gilt was down 14.4 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 360000+ CASES AND 15500+ DEATHS. THE VIRUS SEEMS TO BE DOWN TO A TRICKLE IN CHINA AS NEW CASES AND DEATHS SEEM TO BE ACCELERATING INTERNATIONALLY.   (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,  Bombardier Inc. (USD) 7.5% 12/1/2024 Reg S made some analysts ‘Conviction buy’ lists. (See the chart for Bombardier Inc. bonds below). Pierre Robert

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 1.27% -10.05% -20.41% -19.20% -19.28% -7.54% Mining -3.78% -13.09% -19.54% -17.57% -17.86% -8.12% Construction -6.15% -13.65% -20.39% -17.71% -17.84% -13.44% Manufacturing -1.71% -9.24% -16.38% -12.04% -12.22% -9.46% Transportion, Communication, Electric/Gas -2.66% -11.03% -17.31% -16.19% -16.17% -7.26% Wholesale -1.84% -8.04% -9.44% -7.75% -8.10% 3.68% Retail -2.02% -8.20% -7.40% -1.71% -1.48% 14.69% Finance, Insurance, Real-Estate -1.27% -8.12% -13.58% -10.94% -11.18% -1.91% Services -0.60% -8.36% -17.56% -16.67% -16.84% -3.75% Energy 0.02% -12.01% -35.84% -37.16% -37.42% -41.07%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 69.93, Greece 173.31. Sovereign wideners (5Y):  Finland 10.83 and Ireland 22.72.

New Issues

New Issues [Continued]

1. Citigroup Inc. (USD) 0% 4/8/2060 (03/19/2020): 120MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%. 2. Goldman Sachs Group Inc. (USD) 0% 3/24/2050 (03/19/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%. 3. Goldman Sachs Group Inc. (USD) 0% 3/31/2050 (03/19/2020): 550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%. 4. Morgan Stanley & Co. Intl. PLC (AUD) 0% 4/9/2050 (03/19/2020): 115MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%. 5. Citigroup Inc. (USD) 0% 3/26/2060 (03/19/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%. 6. Barclays Bank PLC (JPY) 2% 3/22/2022 (03/19/2020): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2%.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 03/23/2020, 122.35 NAV as of 03/23/2020, 80.64 Daily NAV Change (%) – 0.61% Daily NAV Change (%) -2.55%

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: currently 7.5% (seasonally adjusted, November 2019)
• Eurostat’s quarterly GDP: 0.4% (2019 Q4)
• 6-month Euribor: current value –0.313%, as of 03/23/2020.

Copyright 2020 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.