ROYAL BANK OF SCOTLAND (RBC) EXPANDED ITS FUNDING BY TWOFOLD to assist small businesses, increasing the total to 6 billion pounds. The original purpose of the funding was to “Brexit-proof” businesses, however, the initial purpose has shifted. Mike Slevin, head of capital management at NatWest stated: “It’s really about demand from growth sectors in the UK economy” including green energy and technology. U.K. household finance index moved in tandem with weak April data suggesting a downbeat consumer sentiment despite an uptick in the perception of job security. 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, HSBC Holdings PLC (USD) 4.25% 8/18/2025 made some analysts' 'Conviction Buy' lists. (See the chart for HSBC Holdings PLC bonds below). Corey Mahoney (cmahoney@advantagedata.com).
Sovereign-Debt Snapshot
| Country | Maturity (Y) | Yield (%) | Previous (%) | Spread (bp) | |
|---|---|---|---|---|---|
| Australia | 10 | 1.960 | 1.960 | -62.1 | |
| Belgium | 10 | 0.462 | 0.462 | -211.8 | |
| France | 10 | 0.370 | 0.370 | -221.0 | |
| Germany | 10 | 0.026 | 0.026 | -255.4 | |
| Italy | 10 | 2.451 | 2.451 | -12.9 | |
| Japan | 10 | -0.026 | -0.026 | -260.6 | |
| Netherlands | 10 | 0.102 | 0.102 | -247.8 | |
| Portugal | 10 | 1.166 | 1.166 | -141.4 | |
| Spain | 10 | 1.061 | 1.061 | -151.9 | |
| Sweden | 10 | 0.275 | 0.275 | -230.6 | |
| U.K. | 10 | 1.198 | 1.198 | -138.2 | |
| U.S. | 10 | 2.580 | 2.564 | ... | |
Credit-Default Swap Market
New Issuance
| New Issues | New Issues [Continued] |
|---|---|
|
1. Erste Group Bank AG (EUR) 0.4% 5/7/2034 (04/22/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding .4%. 2. Davide Campari-Milano SPA (EUR) 1.655% 4/30/2024 (04/23/2019): 150MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.66%. |
ADI Indexes
| iShares Core EUR UCITS | iShares Euro High Yield UCITS |
| NAV as of 04/23/2019, 131.68 | NAV as of 04/23/2019, 104.06 |
| Daily NAV Change (%) -0.07% | 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 7.8% (seasonally adjusted, February 2019)
- Eurostat's quarterly GDP: 0.2% (2018 Q3 Final)
- 6-month Euribor: current value -0.232%, as of 04/18/2019
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