European Bond Research - April 9, 2019

“UK ECONOMY TO LOSE 3.5 PERCENT OF GDP IN NO-DEAL BREXIT,” STATED THE IMF. The increase in trade barriers has a detrimental impact on UK foreign domestic demand. The IMF downgraded its forecast for economic growth in Britain this year to 1.2 percent from a forecast of 1.5 percent, the weakest since 2009. Britain could suffer a loss of 2-3 years of positive GDP if it departs the EU without a deal. The downward revisions reflect the negative effect of prolonged uncertainty about the Brexit outcome. BoE stated, “We are ready to take a cautious, data-dependent approach to monetary policy.” The UK 10-year Gilt declined one basis point.  FTSE 100  -0.35%, STOXX Europe 600 -0.47%, CAC 40 -0.65%, German DAX -0.94%.

AQUIS EXCHANGE REVISES IT’S NO-DEAL BREXIT STRATEGY TO PROVIDE GREATER LIQUIDITY AND EFFICIENT PRICING. Their pan-European stock trading platform will allow clients to access its new platform in Paris starting Monday morning if the UK leaves the European Union without an exit deal. ADI (Advantage Data Inc.) corporate-bond index data showed a net daily yield increment for high-grade versus high-yield constituents. Among European investment grade bonds showing a concurrence of top price gains at appreciable volumes traded,  BP Capital Markets PLC (USD) 2.112% 9/16/2021 made some analysts' 'Conviction Buy' lists. (See the chart for  BP Capital Markets PLC bonds below). Niral Mehta (nmehta@advantagedata.com).

Country	Maturity (Y)	Yield (%)	Previous (%)	Spread (bp)
Australia	10	1.885	1.913	-63.6
Belgium	10	0.466	0.456	-205.5
France	10	0.357	0.362	-216.3
Germany	10	0.011	0.010	-250.9
Italy	10	2.490	2.478	-3.1
Japan	10	-0.045	-0.029	-256.6
Netherlands	10	0.093	0.096	-242.8
Portugal	10	1.224	1.255	-129.7
Spain	10	1.085	1.100	-143.5
Sweden	10	0.258	0.247	-226.2
U.K.	10	1.115	1.118	-140.5
U.S.	10	2.520	2.494	...

LATEST NEWS: Top moves, sovereign tighteners (5Y): Belgium 25 bp and Dubai 132 bp. Sovereign wideners (5Y): Denmark 11 bp and Finland 13 bp.

New Issues	New Issues [Continued]
1. Ineos Finance PLC (EUR) 2.875% 5/1/2026 Reg S (04/08/2019):770MM Secured Notes, Price at Issuance 100, Yielding 2.875%. 2. Acron Swiss Premium Asset AG (CHF) 3% 4/8/2020 (04/08/2019):10000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3%. 3. Caisse Centrale du Credit Immobilier de France SA (EUR) 0.125% 3/1/2021 (04/08/2019): 350MM Senior Preferred Security.

DATA CHECK:

iShares Core EUR UCITS	iShares Euro High Yield UCITS
NAV as of 04/09/2019, 131.27	NAV as of 04/09/2019, 103.94
Daily NAV Change (%) +0.03%	Daily NAV Change (%) -0.06%

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 -0.231%, as of 04/08/2019

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