European Bond Research – September 17, 2020

GLOBAL MARKETS DOWN AS 860K FILE FOR UNEMPLOYMENT. THE FED’S UNCERTAINTY RATTLED MARKETS AS TO WHERE TO GO NEXT. INVESTORS ARE ALSO WAITING TO SEE WHAT CONGRESS WILL PASS. FTSE 100 -0.47%, German DAX -0.36%, CAC 40 -0.69%, STOXX Europe 600 -0.51%.  The 10-year Gilt was down 2.6 bps.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 30.3 MILLION+ CASES AND 950000+ 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 -0.22% -0.39% 0.39% 4.69% 5.88% 10.77% Mining 0.26% -0.02% 1.10% 5.39% 0.93% 3.98% Manufacturing -0.04% -0.79% 0.35% 5.12% -0.54% 1.42% Transportion, Communication, Electric/Gas -0.06% -0.23% 0.29% 1.41% 3.21% 5.84% Wholesale 0.02% 2.20% 0.24% 3.75% 10.11% 11.39% Retail -0.13% 4.52% 13.50% 11.44% -6.46% -5.09% Finance, Insurance, Real-Estate 0.08% 0.35% 0.72% 3.16% 5.17% 9.37% Services -0.16% 0.07% -0.38% 4.44% 0.07% 5.39% Energy 0.77% -12.48% -22.98% -26.78% -41.51% -46.57%   Total returns (non-annualized) by rating, market weighted.

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 36.70, Belgium 12.42. Sovereign wideners (5Y):  Italy 132.40 and Greece 138.75.

New Issues

New Issues [Continued]

1. Intrum AB (EUR) 4.875% 8/15/2025 (09/16/2020): 250MM Senior Unsecured Notes, Price at Issuance 100.75, Yielding 4.7%. 2. Svenska Cellulosa AB (SEK) 1.125% 9/23/2027 (09/16/2020): 1200MM Senior Unsecured Notes. 3. Met Life Global Funding Inc. (CHF) 0.125% 9/25/2028 (09/16/2020): 250MM Secured Notes, Price at Issuance 100, Yielding .13%. 4. Novartis Finance SA (EUR) 0% 9/23/2028 (09/16/2020): 1850MM Senior Unsecured Notes. 5. Commerzbank AG (EUR) VAR% 3/24/2026 (09/16/2020): 500MM Senior Non Preferred Notes. 6. Maxeda B.V. (EUR) 5.875% 10/1/2026 Reg S (09/16/2020): 420MM First Lien Notes, Price at Issuance 100, Yielding 5.88%. 7. Maxeda B.V. (EUR) 5.875% 10/1/2026 144A (09/16/2020): 420MM First Lien Notes, Price at Issuance 100, Yielding 5.88%. 8. Optivo (GBP) 5.25% 3/13/2043 (09/17/2020): 150MM Secured Notes. 9. Prs Finance Plc (GBP) 2% 1/23/2029 (09/17/2020): 74MM Secured Notes. 10. Prs Finance Plc (GBP) 1.5% 8/24/2034 (09/17/2020): 57564MM Secured Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 09/17/2020, 133.86 NAV as of 09/17/2020, 98.52 Daily NAV Change (%) +0.01% Daily NAV Change (%) -0.15%

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 –0.462%, as of 09/16/2020.

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