Advantage Data High Yield Bond Market Summary

European Bond Research - March 7, 2019

Posted by Niral Mehta on Mar 7, 2019 1:37:27 PM
EUROPEAN CENTRAL BANK CHOPS EUROZONE GDP GROWTH FORECAST for 2019 after several weak economic data reports. The GDP estimate has been revised down to 1.1 percent from 1.7 percent, in addition, the ECB plans to postpone any rate hikes until the end of the year.  UK treasury yields plunge upon the announcement, The UK 10-year Gilt sank 6 basis points and the 30-year gilt dipped 5.1 basis points. FTSE 100 -0.68%, STOXX Europe 600 -0.56%, CAC 40 -0.48%, German DAX -0.73%

GERMAN REGULATORS ARE REVIEWING DOZENS OF APPLICATIONS from British financial firms pursuing a relocation to Germany in wake of the approaching Brexit deadline. The ECB announced its intent to start a scheme offering cheap loans to banks in order to keep credit lines open preventing a further slowdown.  The central bank plans to provide financial lending institutions long-term loans supporting the wavering economy. ECB President Mario Draghi stated, “The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appear to be leaving marks on economic sentiment”.  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,  AerCap Ireland Capital LTD (USD) 3.3% 1/23/2023 made some analysts' 'Conviction Buy' lists. (See the chart for AerCap Ireland Capital bonds below.) Corey Mahoney  (cmahoney@advantagedata.com).

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 2.108 2.167 -58.2  
Belgium  10 0.641 0.689 -204.9  
France  10 0.514 0.561 -217.7  
Germany  10 0.129 0.170 -256.2  
Italy  10 2.615 2.707 -7.5  
Japan  10 -0.004 0.008 -269.5  
Netherlands  10 0.227 0.269 -246.4  
Portugal  10 1.421 1.457 -127.0  
Spain  10 1.117 1.155 -157.4  
Sweden  10 0.369 0.399 -232.1  
U.K.  10 1.228 1.289 -146.3  
U.S.  10 2.691 2.719 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Finland 12 bp and Panama 63 bp. Sovereign wideners (5Y): India 96 bp and Japan 19 bp.

New Issuance

New Issues New Issues [Continued]

1. Eurochem Finance Designated Activity Company (USD) 5.5% 3/13/2024 144A (03/06/2019): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%.

2. Societe Generale SA (EUR) 1.06% 9/14/2029 (03/06/2019):1500MM Secured Notes, Price at Issuance 100, Yielding 1.06%.

3. Stadshypotek AB (EUR) 0.375% 3/13/2026 (03/06/2019): 1250MM Secured Notes.

 

ADI Indexes

DATA CHECK:
iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 03/07/2019, 129.85 NAV as of 03/07/2019, 104.13
Daily NAV Change (%) +0.25% Daily NAV Change (%) -0.12%

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 03/06/2019

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


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