Advantage Data High Yield Bond Market Summary

European Bond Research - March 8, 2019

Posted by Niral Mehta on Mar 8, 2019 12:15:19 PM
POUND CONTINUING POSITIVE RISE IN VALUE AS MOMENTUM is implying a no-deal Brexit will be averted. The pound is up 7 percent against the dollar year to date, making it the world’s best performing major currency. “Nomura’s positioning metrics indicate that net short pound positions have declined to near their lowest levels this year, with a net short of less than $3 billion.” With spreads on the pound narrowing and liquidity elevating, we could see the pound go higher in the upcoming weeks. The UK 10 year Government Bond yield rose one basis point. FTSE 100 -0.73%, STOXX Europe 600 -0.94%, CAC 40 -0.74%, German DAX -0.67%.

POOR DATA SINKS EUROPEAN SHARES at its lowest level since December 2018. China trade data and German industrial orders tightened bears’ grip on the market, justifying a global economic slowdown. EPFR data showed investors redeemed $3.1 billion from European equity funds this week, driving total outflow of capital from the region year-to-date tp $25.9 billion. The next few weeks will be crucial as trading platforms maneuver assets from London to the European Union. Consultancy EY stated, “So far, 800 billion euros of assets had shifted from London to new banking hubs in EU.” European antitrust authorities plan to fine carmakers BMW and VW up to “1 billion euros each for colluding on reducing the effectiveness of exhaust filtering systems,” German weekly stated. 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) 4.625% 7/2/2044 made some analysts' 'Conviction Buy' lists. (See the chart for Johnson Controls International PLC bonds below.) Niral Mehta (nmehta@advantagedata.com).

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 2.096 2.108 -54.0  
Belgium  10 0.555 0.641 -208.1  
France  10 0.425 0.514 -221.1  
Germany  10 0.067 0.129 -256.8  
Italy  10 2.487 2.615 -14.9  
Japan  10 -0.009 -0.004 -264.5  
Netherlands  10 0.160 0.227 -247.6  
Portugal  10 1.339 1.421 -129.7  
Spain  10 1.056 1.117 -158.0  
Sweden  10 0.316 0.369 -231.9  
U.K.  10 1.173 1.228 -146.2  
U.S.  10 2.636 2.691 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Belgium 25 bp and Finland 12 bp. Sovereign wideners (5Y): Germany 11 bp and Japan 19 bp.

New Issuance

New Issues New Issues [Continued]

1. Banque Fed du Credit Mutuel (EUR) 1.75% 3/15/2029 (03/07/2019): 1000MM Senior Non Preferred Notes, Price at Issuance 99.302, Yielding 1.827%.

2. Turk Sise Ve Cam Fabrika (USD) 6.95% 3/14/2026 (03/07/2019):550MM Senior Unsecured Notes.

3. Turk Sise Ve Cam Fabrika (USD) 6.95% 3/14/2026 Reg S (03/07/2019): 550MM Senior Unsecured Notes.

 

ADI Indexes

DATA CHECK:
iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 03/08/2019, 129.59 NAV as of 03/08/2019, 103.71
Daily NAV Change (%) -0.18% Daily NAV Change (%) -0.34%

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 03/07/2019

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


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