Advantage Data High Yield Bond Market Summary

European Bond Research - March 13, 2019

Posted by Niral Mehta on Mar 13, 2019 12:22:04 PM
EUROPEAN SHARES ADVANCED HIGHER as investors hope the UK rejects no-deal Brexit. This induced the British pound to rally by half a percentage point. UBS Analyst stated, “UBS’s Wealth Management Group remain cautious with client’s assets and are avoiding short-term rallies in the pound, and reducing exposure to UK equities.” Investment Bank, JP Morgan reduced the probability of the UK leaving the European Union to 35 percent from 45 percent. Despite the optimistic environment, Japan’s machinery orders fell in January at the fastest pace in four months causing downward pressure on the Nikkei. The Australian dollar skidded lower after a consumer confidence gauge triggered concerns about a slowing economy. The UK 10-year Gilt rose 2 basis points. FTSE 100, +0.11%, STOXX Europe 600 +0.51%, CAC 40 +0.65%, German DAX +0.65%.

INSURER, PRUDENTIAL SHIFTS 36 BILLION POUNDS IN ASSETS TO Luxembourg ahead of Brexit. Prudential will be disbursing a 49.35 pence per share to its shareholders, as it sees promising growth in the upcoming months. CEO of Prudential Mike Wells stated, ”Prudential’s portfolio is not dictated on Brexit, but rather what retail and institutional clients would want." 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, Barclays PLC (USD) 3.65% 3/16/2025 made some analysts' 'Conviction Buy' lists. (See the chart for Barclays PLC Bonds below). Niral Mehta (nmehta@advantagedata.com).

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 2.043 2.040 -56.4  
Belgium  10 0.546 0.539 -206.0  
France  10 0.415 0.409 -219.1  
Germany  10 0.057 0.071 -254.9  
Italy  10 2.540 2.563 -6.6  
Japan  10 -0.030 -0.036 -263.6  
Netherlands  10 0.151 0.152 -245.5  
Portugal  10 1.332 1.322 -127.4  
Spain  10 1.069 1.044 -153.7  
Sweden  10 0.297 0.294 -230.9  
U.K.  10 1.166 1.184 -144.0  
U.S.  10 2.606 2.642 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Egypt 323 bp and China 46 bp. Sovereign wideners (5Y): Sweden 12 bp and Italy 196 bp.

New Issuance

New Issues New Issues [Continued]

1. European Investment Bank (PLN) 3% 11/25/2029 (03/12/2019):1000MM Senior Unsecured Notes.

2. Danske Bank AS (EUR) 1.625% 3/15/2024 (03/12/2019): 500MM Senior Non Preferred Notes, Price at Issuance 99.463, Yielding 1.738%.

3. Telenor ASA (SEK) FLT% 9/20/2021 (03/12/2019): 2750MM Senior Unsecured Notes, Price at Issuance 100.

 

ADI Indexes

DATA CHECK:
iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 03/13/2019, 130.13 NAV as of 03/13/2019, 104.30
Daily NAV Change (%) +0.08% Daily NAV Change (%) +0.11%

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 -0.231%, as of 03/12/2019

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


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