European Bond Research – October 30, 2020

GLOBAL MARKETS END THEIR WORST WEEK SINCE MARCH AS COVID-19 VIRUS TOP 90,000 CASES A DAY. HUGE BOUNCE BACK IN GDP GROWTH COUPLED WITH STRONG SEPTEMBER CONSUMER FIGURES GIVE SOME HOPE TO MARKETS. FTSE 100 -0.08%, German DAX +0.36%, CAC 40 +0.54%, STOXX Europe 600 +0.18%.  The 10-year Gilt was up 4.1 bps.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 45.8 MILLION+ CASES AND 1.19 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 -0.11% -0.82% 0.55% 0.46% 4.95% 7.18% Mining -0.14% -0.41% -0.51% 1.90% 1.57% 3.62% Manufacturing -0.17% 0.14% 1.69% 2.26% 3.29% 4.40% Transportion, Communication, Electric/Gas -0.11% -0.53% 0.24% 0.05% 3.39% 4.90% Wholesale 0.12% 0.24% 0.23% 1.57% 10.29% 10.54% Retail -0.13% 0.38% 3.62% 25.93% -2.79% -1.37% Finance, Insurance, Real-Estate -0.20% -0.10% 1.02% 1.70% 5.29% 7.78% Services -0.15% -0.74% 1.69% 1.72% 1.63% 3.85% Energy -0.38% 9.54% 24.72% -11.22% -26.91% -33.79%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 40.5,  Belgium 13.57. Sovereign wideners (5Y):  Italy 124.91 and Greece 147.79.

New Issues

New Issues [Continued]

1. Selecta Group BV (EUR) 10% 7/1/2026 (10/29/2020): 220MM Second Lien Notes. 2. Selecta Group BV (EUR) 12% 10/1/2026 (10/29/2020): 157MM Unsecured Notes, Price at Issuance 100, Yielding 12%. 3. Selecta Group BV (EUR) 12% 10/1/2026 (10/29/2020): 78MM Unsecured Notes, Price at Issuance 100, Yielding 12%. 4. Akelius Residential Property Publ AB (EUR) 1.125% 1/11/2029 (10/29/2020): 500MM Senior Unsecured Notes. 5. Verizon Communications Inc. (GBP) 1.125% 11/3/2028 (10/29/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.358, Yielding 1.21%. 6. Verizon Communications Inc. (GBP) 1.875% 11/3/2038 (10/29/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.319, Yielding 1.92%. 7. Selecta Group BV (EUR) 8% 4/1/2026 (10/29/2020): 637MM First Lien Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 10/30/2020, 134.70 NAV as of 10/30/2020, 97.49 Daily NAV Change (%) +0.03% Daily NAV Change (%) -0.22%

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 –0.515%, as of 10/29/2020.

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