Advantage Data High Yield Bond Market Summary

European Bond Research - March 15, 2019

Posted by Niral Mehta on Mar 15, 2019 12:22:32 PM
BRITAIN’S ECONOMY CAME CLOSE TO STAGNATING in February amid Brexit nerves and “sluggish” global growth. Earlier this month, the ECB offered banks a new round of cheap loans to help revive the Eurozone economy. Norway’s central bank is expected to raise its key rate on March 21 and will continue to tighten later this year due to rising inflation and solid growth. Norway’s 2018 Q4 growth exceeded expectations and higher demand in crude oil prices point to a justification for tighter policy. The UK 10-year Gilt declined one basis point. FTSE 100, +0.50%, STOXX Europe 600 +0.63%, CAC 40 +0.63%, German DAX +0.18%.

HONDA ANNOUNCED, “ANY BREXIT DEAL must be long enough to sustain stability.” Honda retains 10 percent of the market share of cars in Britain, they have declared closing its factory due to Brexit uncertainty. Honda, BMW, and Rolls-Royce brands account for 55 percent of UK car output, all plan to shut their factories in April. “The BMW group wants to achieve security on operations and revenue.” Honda stated they are relying on the government to deliver a “clear, legally certain, path forward to avoid no deal.”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, Royal Bank of Scotland Group PLC (USD) 6.1% 6/10/2023 made some analysts' 'Conviction Buy' lists. (See the chart for Royal Bank of Scotland Group Bonds below). Niral Mehta (nmehta@advantagedata.com).

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 1.984 1.968 -64.1  
Belgium  10 0.541 0.536 -208.4  
France  10 0.473 0.470 -215.2  
Germany  10 0.089 0.066 -253.6  
Italy  10 2.500 2.559 -12.5  
Japan  10 -0.041 -0.046 -266.6  
Netherlands  10 0.175 0.156 -245.0  
Portugal  10 1.329 1.341 -129.6  
Spain  10 1.195 1.198 -143.0  
Sweden  10 0.307 0.291 -231.8  
U.K.  10 1.225 1.199 -140.0  
U.S.  10 2.625 2.621 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Dubai 123 bp and Belgium 23 bp. Sovereign wideners (5Y): China 46 bp and Portugal 67 bp.

New Issuance

New Issues New Issues [Continued]

1. Erdoel Lagergesellschaft (EUR) 0.834% 3/21/2029 (03/14/2019):75MM Senior Unsecured Notes.

2. Hypo Vorarlberg Bank AG (EUR) 0.295% 3/22/2022 (03/14/2019):50MM Senior Unsecured Notes, Price at Issuance 100, Yielding .3%.

3. Just Group LTD (GBP) 9.375% PERP (03/14/2019): 300MM Junior Subordinated Notes.

 

ADI Indexes

DATA CHECK:
iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 03/15/2019, 130.44 NAV as of 03/15/2019, 102.92
Daily NAV Change (%) +0.05% Daily NAV Change (%) +0.00%

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 03/14/2019

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


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