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European Bond Research – March 26, 2020

Posted on March 26, 2020
EUROPEAN BOND RESEARCH
March 26, 2020
Bond Markets

STOCKS IN EUROPE WERE DOWN FOR MOST OF THE DAY AS THE CORONAVIRUS CONTINUES TO RAVAGE EUROPE. MARKETS FINISHED UP DUE TO THE PASSING OF THE US AID PACKAGE AND SURGING US MARKETS. US SURGING JOB CLAIMS SEEMED TO NOT AFFECT THE MARKETS. FTSE 100 +2.24%, German DAX +0.9%, CAC 40 +1.52%, STOXX Europe 600 +2.01%.  The 10-year Gilt was down 4.9 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 500000+ CASES AND 22000+ 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 0.04% 0.13% -21.38% -20.32% -20.30% -9.58%
Mining 0.63% -5.97% -19.10% -17.43% -17.46% -6.96%
Construction -1.26% -18.26% -26.04% -24.00% -23.96% -20.06%
Manufacturing 1.58% -6.09% -18.28% -13.95% -14.19% -9.33%
Transportion, Communication, Electric/Gas 2.98% -3.84% -17.02% -16.99% -16.75% -9.42%
Wholesale -5.83% -9.51% -16.85% -15.25% -15.16% -4.78%
Retail -2.01% -4.34% -11.05% -4.34% -3.80% 11.45%
Finance, Insurance, Real-Estate 2.03% -4.25% -13.87% -11.52% -11.59% -1.72%
Services 1.71% -7.83% -20.62% -20.43% -20.51% -5.25%
Energy 3.89% -11.59% -40.91% -42.23% -41.98% -45.97%
 
Total returns (non-annualized) by rating, market weighted.
Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 49.24, Greece 173.31. Sovereign wideners (5Y):  Finland 10.83 and Ireland 22.72.

New Issuance

New Issues New Issues [Continued]
1. Koninklijke Philips Electronics NV (EUR) 2% 3/30/2030 (03/25/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.204, Yielding 2.089%.

2. TMB Bank Public Company Limited (EUR) 0.25% 3/25/2021 (03/25/2020): 200MM Senior Unsecured Notes, Price at Issuance 100.

3. Volvo Treasury AB (SEK) 2.26% 4/3/2023 (03/25/2020): 2000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.26%.

4. Koninklijke Philips Electronics NV (EUR) 1.375% 3/30/2025 (03/25/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.55, Yielding 1.469%.

5. Credit Suisse AG London (AUD) FLT% 4/16/2023 (03/26/2020): 1000MM Unsecured Notes, Price at Issuance 100.

6. Credit Suisse AG London (AUD) FLT% 4/16/2023 (03/26/2020): 1000MM Unsecured Notes, Price at Issuance 100.

7. Credit Suisse AG London (USD) FLT% 6/20/2025 (03/26/2020): 50MM Senior Unsecured Notes, Price at Issuance 100.

8. Standard Chartered PLC (USD) 0% 4/9/2050 (03/26/2020): 100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 03/26/2020, 125.33 NAV as of 03/26/2020, 87.62
Daily NAV Change (%) +0.99% Daily NAV Change (%) +2.18%

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 ratecurrently 7.5% (seasonally adjusted, November 2019)
  • Eurostat’s quarterly GDP: 0.4% (2019 Q4)
  • 6-month Euribor: current value –0.298%, as of 03/25/2020.

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