European Bond Research – March 27, 2020

MARKETS DOWN AS EUROPEAN COUNTRIES ARE UNABLE TO COME TO A UNIFIED CONCRETE PLAN OF ATTACK CONCERNING THE VIRUS. CASES AND DEATHS KEEP RISING. FTSE 100 -5.24%, German DAX -3.68%, CAC 40 -4.23%, STOXX Europe 600 -3.26%.  The 10-year Gilt was down 3.6 bps.

CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 570000+ CASES AND 26000+ 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 7.26% 6.25% -15.58% -14.43% -14.37% -2.78% Mining -0.52% -3.65% -21.70% -20.04% -20.14% -10.73% Construction 0.54% -15.08% -25.12% -23.56% -23.47% -19.84% Manufacturing 1.16% -2.25% -17.48% -14.31% -14.53% -9.01% Transportion, Communication, Electric/Gas 2.11% 6.05% -13.18% -12.71% -12.60% -3.50% Wholesale -1.18% -6.06% -15.45% -13.70% -13.64% -2.81% Retail -1.07% -3.44% -11.77% -5.42% -4.82% 10.56% Finance, Insurance, Real-Estate 2.06% 0.16% -11.88% -9.83% -9.79% 0.03% Services 1.36% -2.25% -19.77% -19.69% -19.75% -9.95% Energy 2.26% -9.63% -40.14% -41.16% -41.45% -45.54%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 50.4, Greece 167.29. Sovereign wideners (5Y):  Finland 10.83 and Ireland 22.72.

New Issues

New Issues [Continued]

1. Cie De St-Gobain (EUR) 2.375% 10/4/2027 (03/26/2020): 750MM Senior Unsecured Notes. 2. Standard Chartered PLC (USD) VAR% 4/1/2031 Reg S (03/26/2020): 2000MM Senior Unsecured Notes, Price at Issuance 100. 3. Credit Suisse AG London (AUD) FLT% 4/16/2023 (03/26/2020): 1000MM Unsecured Notes, Price at Issuance 100. 4. Credit Suisse AG London (AUD) FLT% 4/16/2023 (03/26/2020): 1000MM Unsecured Notes, Price at Issuance 100. 5. Credit Suisse AG London (USD) FLT% 6/20/2025 (03/26/2020): 50MM Senior Unsecured Notes, Price at Issuance 100. 6. Standard Chartered PLC (USD) 0% 4/9/2050 (03/26/2020): 100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%. 7. Quilter PLC (GBP) 4.478% 2/28/2028 (03/27/2020): 200MM Subordinated Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 03/27/2020, 125.52 NAV as of 03/27/2020, 86.3 Daily NAV Change (%) -0.47% Daily NAV Change (%) -2.01%

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 –0.274%, as of 03/25/2020.

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