European Bond Research – November 19, 2020

EUROPEAN MARKETS LOWER AS CORONA VIRUS SURGES IN EUROPE. PROGRESS AT SLOWING THE VIRUS AND THE VACCINATION NEWS HAS HELPED KEEP MARKETS FROM TUMBLING. FTSE 100 -0.80%, German DAX -0.88%, CAC 40 -0.67%, STOXX Europe 600 -0.75%.  The 10-year Gilt was DOWN 1.3 bps.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 57 MILLION+ CASES AND 1.36 MILLION+ DEATHS.  (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 -0.03% 0.11% 1.66% 1.47% 7.13% 9.46% Mining -0.06% 1.11% 4.30% 2.32% 3.95% 5.21% Manufacturing 0.05% 0.37% 1.86% 3.51% 4.60% 5.54% Transportion, Communication, Electric/Gas -0.08% -0.05% 0.48% 1.34% 4.26% 5.66% Wholesale 0.50% 1.21% 1.30% 1.96% 12.00% 11.71% Retail 0.29% -0.46% 3.09% 24.92% 0.07% 2.37% Finance, Insurance, Real-Estate 0.07% 0.51% 1.98% 3.17% 7.80% 9.78% Services -0.00% 0.39% 1.60% 2.51% 2.58% 5.21% Energy 0.40% 7.43% 23.66% 3.52% -22.42% -29.68%   Total returns (non-annualized) by rating, market weighted.

New Issues

New Issues [Continued]

1. Boparan Finance PLC (GBP) 7.625% 11/30/2025 Reg S (11/18/2020): 475MM Secured Notes, Price at Issuance 100, Yielding 7.63%. 2. Hemso Fastighets AB (SEK) FLT% 11/25/2022 (11/18/2020): 500MM Senior Unsecured Notes. 3. Veon Hldg BV (USD) 3.375% 11/24/2027 Reg S (11/18/2020): 1250MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.38%. 4. Societe Generale (EUR) VAR% 11/25/2031 (11/18/2020): 50MM Senior Non Preferred Notes, Price at Issuance 100. 5. BPER Banca SpA (EUR) VAR% 11/30/2030 (11/18/2020): 400MM Subordinated Notes, Price at Issuance 100. 6. Permanent TSB PLC (EUR) VAR% PERP (11/18/2020): 125MM Junior Subordinated Notes, Price at Issuance 100. 7. Hoist Finance AB (EUR) 3.375% 11/27/2024 (11/18/2020): 200MM Senior Preferred Security, Price at Issuance 100, Yielding 3.38%. 8. Vinci SA (EUR) 0% 11/27/2028 (11/18/2020): 500MM Senior Unsecured Notes. 9. Finsbury Hill Dac (EUR) 0% 12/9/2024 (11/19/2020): 300MM Unsecured Notes, Price at Issuance 100, Yielding 0%. 10. Erste Group Bank AG (EUR) 4.25% PERP (11/19/2020): 750MM Junior Subordinated Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 11/17/2020, 135.93 NAV as of 11/17/2020, 100.89 Daily NAV Change (%) +0.13% Daily NAV Change (%) +0.02%

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 –0.513%, as of 11/18/2020.

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