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European Bond Research – November 22, 2019

Posted on November 22, 2019
November 22, 2019

Bond Markets

UK COMPANIES ENDURE SHARPEST DOWNTURN SINCE BREXIT VOTE. British PMI registered 48.6, being below 50, means the UK economy is actually starting to contract. The pound lost against the dollar.  FTSE 100 +1.22%, German DAX +.2%, CAC 40 +.2%, STOXX Europe 600 +0.44%.  The 10-year Gilt down 4.9 basis points.

MARKETS UP DUE TO POSITIVE COMMENTS MADE BY CHINESE LEADER XI JINPING. Next week US and Chinese representatives will meet in another round of trade talks. (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) 5.75% 3/15/2022 Reg S  made some analysts ‘Conviction buy’ lists. (See the chart for Bombardier Inc. bonds below). Pierre Robert

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Austria 9.635 and Ireland 23.26. Sovereign wideners (5Y):  Denmark  9.95 and Korea 28.35 .

New Issuance

New Issues New Issues [Continued]
1. Morgan Stanley Finance LLC (USD) 0% 11/20/2059 (11/21/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%.

2. Euro Secured Notes Issuer (EUR) 0% 11/21/2022 (11/21/2019): 100MM Secured Notes, Price at Issuance 100, Yielding 0%.

3. Jaguar Land Rover Automotive PLC (EUR) 5.875% 11/15/2024 Reg S (11/21/2019): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.88%.

ADI Indexes


iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 11/22/2019, 133.93 NAV as of 11/22/2019, 103.62
Daily NAV Change (%) +0.22% Daily NAV Change (%) +0.08%

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, May 2019)
  • Eurostat’s quarterly GDP: 0.4% (2019 Q1)
  • 6-month Euribor: current value –0.34%, as of 11/21/2019

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