Advantage Data High Yield Bond Market Summary

European Bond Research - March 12, 2019

Posted by Niral Mehta on Mar 12, 2019 12:12:53 PM
IRISH SHARES OUTPERFORMED THE REST OF THE EUROZONE after Britain and the European Union agreed to alterations on Britain’s withdrawal agreement, which eased some fears of no-deal Brexiton March 29. Dublin’s ISEQ climbed 1.4 percent, set for its biggest gain since Feb. 5. Head of European Equities at German asset Manager DWS stated, “Positive momentum in the markets will continue once we know what the final outcome of Brexit is going to be.” The British pound is at a critical level of 1.31 against the U.S. dollar. “Anything above this level is seen as Brexit certainty by investors, whilst anything below is seen as Brexit uncertainty, mentioned Hamish Muress, a Currency Analyst at OFX. FTSE 100 +0.20%, STOXX Europe 600 -0.01%, CAC 40 +0.14%, German DAX -0.16%.

TOP WEALTH MANAGER OF QUILTER'S CLIENTS ARE IN WEALTH PRESERVATION MODE AS BREXIT LOOMS. CEO of Quilter, Paul Feeney stated “We are living in unprecedented times. In these unchartered waters, the only certainty seems to be uncertainty.” Bank of England has implemented that UK banks triple their liquid assets to buffer a possible financial shock if they need to. This implies Banks are able to withstand a scenario in which banks don’t lend to one another for 100 days, rather than the normal 30 day period. ADI (Advantage Data Inc.) corporate-bond index data showed a net daily yield increment for high-grade versus high-yield constituents. High-grade bonds edged out high-yield debt as of 3 PM, London time. Among European high-grade bonds showing a concurrence of top price gains at appreciable volumes traded, Ensco PLC (USD) 5.75% 10/1/2044 made some analysts' 'Conviction Buy' lists. (See the chart for Ensco PLC bonds below.) Niral Mehta (nmehta@advantagedata.com).

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 2.040 2.042 -59.9  
Belgium  10 0.539 0.541 -210.0  
France  10 0.409 0.412 -223.1  
Germany  10 0.071 0.071 -256.8  
Italy  10 2.563 2.498 -7.6  
Japan  10 -0.036 -0.032 -267.5  
Netherlands  10 0.152 0.160 -248.7  
Portugal  10 1.322 1.344 -131.7  
Spain  10 1.044 1.053 -159.5  
Sweden  10 0.294 0.292 -234.6  
U.K.  10 1.184 1.190 -145.5  
U.S.  10 2.639 2.635 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Belgium 23 bp and Dubai 122 bp. Sovereign wideners (5Y): Finland 13 bp and France 32 bp.

New Issuance

New Issues New Issues [Continued]

1. PepsiCo Inc. (EUR) 0.75% 3/18/2027 (03/11/2019): 500MM Senior Unsecured Notes, Price at Issuance 99.815, Yielding .774%.

2. Erste Group Bank AG (EUR) 1.4% 4/1/2031 (03/11/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.4%.

3. APT Pipelines LTD (GBP) 3.125% 7/18/2031 (03/11/2019): 400MM Senior Unsecured Notes, Price at Issuance 99.224.

 

ADI Indexes

DATA CHECK:
iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 03/12/2019, 129.95 NAV as of 03/12/2019, 104.23
Daily NAV Change (%) +0.22% Daily NAV Change (%) +0.26%

OVERALL EUROPEAN CREDIT MARKET:
The euro-zone economy shows signs of positive momentum, although conditions are expected to deteriorate hindered by the termination of quantitative easing, weakening credit rating quality, and uncertainty regarding the outcome of Brexit. Closely watched indicators and rates:
  • Eurostat's unemployment rate: currently 7.8% (seasonally adjusted, January 2019)
  • Eurostat's quarterly GDP: 0.2% (2018 Q3 Final)
  • 6-month Euribor: current value -0.232%, as of 03/011/2019

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Topics: Analytics, bonds, bond market, market analytics, research, EU, market update, European


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