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European Bond Research – September 11, 2020

Posted on September 11, 2020
EUROPEAN BOND RESEARCH
September 11, 2020
Bond Markets

BUXX DOLLAR INDEX FELL 11 CENTS TO 88.37 AS THE DOLLAR WEAKENED AGAINST THE EURO. GLOBAL MARKETS WERE MIXED AS VOLATILE TECH FELL. FTSE 100 +0.48%, German DAX -0.05%, CAC 40 -0.20%STOXX Europe 600 +0.13%.  The 10-year Gilt was down 4.5 bps.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 28.6 MILLION+ CASES AND 918000+ 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 -0.09% -0.02% 0.66% 4.23% 6.21% 10.61%
Mining -0.08% -0.94% 3.67% 5.00% 0.44% 3.75%
Manufacturing -0.17% -0.09% -0.34% 3.88% 0.19% 2.24%
Transportion, Communication, Electric/Gas -0.04% -0.26% 0.09% 1.77% 3.44% 6.18%
Wholesale 0.31% -0.53% -1.96% 2.26% 8.08% 8.19%
Retail 2.76% 4.44% 17.30% 15.21% -8.04% -6.86%
Finance, Insurance, Real-Estate -0.03% -0.40% 0.57% 2.51% 4.81% 9.26%
Services -0.00% -0.58% -0.22% 3.22% 0.00% 5.26%
Energy -6.06% -11.71% -16.46% -26.09% -37.22% -42.52%
 
Total returns (non-annualized) by rating, market weighted.
Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 36.15, Belgium 13.33. Sovereign wideners (5Y):  Italy 134.93 and Greece 144.58.

New Issuance

New Issues New Issues [Continued]
1. Vmed O2 Uk Financing I PLC (EUR) 3.25% 1/31/2031 Reg S (09/10/2020): 950MM Secured Notes.

2. Vmed O2 Uk Financing I PLC (GBP) 4% 1/31/2029 Reg S (09/10/2020): 600MM Secured Notes.

3. Encore Capital Group Inc. (EUR) 4.875% 10/15/2025 Reg S (09/10/2020): 350MM Secured Notes, Price at Issuance 98.889, Yielding 5.12%.

4. Swedbank AB (SEK) FLT% 9/16/2025 (09/10/2020): 500MM Senior Unsecured Notes, Price at Issuance 100.

5. Terega Sasu (EUR) 0.875% 9/17/2030 (09/10/2020): 500MM Senior Unsecured Notes.

6. Icade Sante (EUR) 1.375% 9/17/2030 (09/10/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.926, Yielding 1.383%.

7. FCA Bank SpA Ireland (EUR) 0.5% 9/18/2023 (09/10/2020): 800MM Senior Unsecured Notes, Price at Issuance 99.68, Yielding .608%.

8. ZF Finance GmbH (EUR) 3% 9/21/2025 (09/10/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.43, Yielding 3.125%.

9. Yorkshire Building Society (EUR) 0.625% 9/21/2025 (09/10/2020): 500MM Senior Preferred Security, Price at Issuance 99.55, Yielding .717%.

10. ZF Finance GmbH (EUR) 3.75% 9/21/2028 (09/10/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.154, Yielding 3.875%.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 09/11/2020, 133.79 NAV as of 09/10/2020, 100.28
Daily NAV Change (%) +0.29% Daily NAV Change (%) -0.05%

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 rateEXPECTED TO SOAR.
  • Eurostat’s quarterly GDP: EXPECTED TO CONTRACT.
  • 6-month Euribor: current value –0.458%, as of 09/09/2020.

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