Advantage Data High Yield Bond Market Summary

European Bond Research - March 5, 2019

Posted by Niral Mehta on Mar 5, 2019 12:10:11 PM
THE POUND STERLING SLIPS on a report of Brexit talks stalling in advance of the United Kingdom’s top lawyer heading to Brussels to push Prime Minister Theresa May’s deal.  Preliminary Eurozone PMI was revised up to 52.8 in February from an initial reading of 52.3 offering some confidence across Europe. FTSE 100 +0.55%, STOXX Europe 600 -0.11%, CAC 40 -0.04%, German DAX -0.06% The UK 10 year Gilt declined 0.04 basis points. 

UK ECONOMY IS CLOSE TO STAGNATION in February as companies prepare for a disorderly Brexit shedding payrolls at the fastest rate in nearly a decade.  The Bank of England announced Britain’s financial institutions are equipped for “significant” volatility, however, to fend off a meltdown the central bank will provide euros to banks BMW is the latest multinational company to announce the possibility of shifting production out of the UK, mulling the risks of a disorderly Brexit.  A board member of BMW stated “This would be really a huge burden for the Mini brand” and when asked about moving production, “We at least have to consider it”. 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,  Johnson Controls International PLC (USD) 5.125% 9/14/20456 made some analysts' 'Conviction Buy' lists. (See the chart for Johnson Controls bonds below.) Corey Mahoney  (cmahoney@advantagedata.com).

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 2.203 2.164 -52.4  
Belgium  10 0.684 0.702 -204.3  
France  10 0.558 0.582 -216.9  
Germany  10 0.163 0.186 -256.4  
Italy  10 2.732 2.733   0.5
Japan  10 0.001 -0.008 -272.6  
Netherlands  10 0.261 0.289 -246.6  
Portugal  10 1.464 1.488 -126.2  
Spain  10 1.174 1.203 -155.3  
Sweden  10 0.403 0.414 -232.4  
U.K.  10 1.277 1.298 -145.0  
U.S.  10 2.727 2.754 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 48 bp and France 30 bp. Sovereign wideners (5Y): Germany 11 bp and Spain 61 bp.

New Issuance

New Issues New Issues [Continued]

1. GL Events SA (EUR) 3% 2/26/2026 (03/04/2019): 64MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3%.

2. Raiffeisen Bank Intl. AG (USD) 2.75% 3/29/2021 (03/04/2019):50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.75%.

 

ADI Indexes

DATA CHECK:
iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 03/05/2019, 129.6 NAV as of 03/05/2019, 104.45
Daily NAV Change (%) -0.12% Daily NAV Change (%) -0.05%

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 7.9% (seasonally adjusted, November 2018)
  • Eurostat's quarterly GDP: 0.2% (2018 Q3 Final)
  • 6-month Euribor: current value -0.230%, as of 03/04/2019

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


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