Advantage Data High Yield Bond Market Summary

European Bond Research - May 20, 2019

Posted by Corey Mahoney on May 20, 2019 12:23:01 PM
INFLOWS TO EUROPEAN FIXED INCOME ETFs significantly outweighed its equity counterparts in April, absorbing 4.3 billion euros accounting for 20.2 percent of inflows year-to-date Equities settled lower as trade fears were reignited and Brexit uncertainty looms,  FTSE 100 -0.56%, German DAX -1.51%, CAC 40 -1.43%, STOXX Europe 600 -1.03%. The 10-year Gilt gained 2.6 basis points.

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DEUTSCHE BANK SHARES PLUMMET hitting a record low as UBS downgrades the German bank, shares settled nearly 3 percent lower.  USB expressed concerns with regards to the operating conditionsand the levered state of the bank.  Quarterly world trade growth remains at a nine-year low amid Brexit uncertainty and escalating tensions between the US and China.  The World Trade Organization stated, “The outlook for trade could worsen further if heightened trade tensions are not resolved or if macroeconomic policy fails to adjust to changing circumstances.”  ADI (Advantage Data Inc.) extensive 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, Danone (USD) 2.947% 11/2/2026 Reg S made some analysts' 'Conviction Buy' lists. (See the chart for Danone bonds below). Corey Mahoney (cmahoney@advantagedata.com).

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 1.652 1.651 -74.6  
Belgium  10 0.385 0.397 -201.3  
France  10 0.289 0.295 -210.9  
Germany  10 -0.101 -0.091 -249.9  
Italy  10 2.673 2.687   27.5
Japan  10 -0.055 -0.060 -245.3  
Netherlands  10 0.086 0.102 -231.2  
Portugal  10 1.048 1.079 -135.0  
Spain  10 0.871 0.904 -152.7  
Sweden  10 0.033 0.035 -236.5  
U.K.  10 1.036 1.075 -136.2  
U.S.  10 2.398 2.392 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): UK 28 bp and France 28 bp. Sovereign wideners (5Y): Ireland 32 bp and Spain 55 bp.

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New Issuance

New Issues New Issues [Continued]

1. Banque Fed du Credit Mutuel (CHF) 0.2% 6/12/2026 (05/20/2019):125MM Senior Preferred Security, Price at Issuance 100.017, Yielding .2%.

2. NatWest Markets PLC (EUR) 1% 5/28/2024 (05/20/2019): 1000MM Senior Unsecured Notes.

 

ADI Indexes

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DATA CHECK:
iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 05/20/2019, 131.75 NAV as of 05/20/2019, 103.34
Daily NAV Change (%) -0.14% Daily NAV Change (%) -0.17%

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 7.7% (seasonally adjusted, March 2019)
  • Eurostat's quarterly GDP: 0.4% (2019 Q1 Preliminary)
  • 6-month Euribor: current value -0.240%, as of 05/17/2019

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Topics: Analytics, bonds, junk bonds, bond market, corporate bonds, market analytics, New Issues, News, research, EU, market update, European


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