European Bond Research - August 1, 2019

Posted by Corey Mahoney on Aug 1, 2019 4:10:03 PM
EUROPEAN INVESTMENT GRADE DEBT ROSE AGAINST JUNK BONDS in net prices linked to actual trades. The Bank of England further slashed its growth forecasts citing Brexit is impacting the economy more than initially anticipated. The bank gave no indication of a rate cut as central bank globally are cutting rates most recently the US Federal Reserve lowered rates by 25 basis points FTSE 100 -0.14%, German DAX +0.38%, CAC 40 +0.59%, STOXX Europe 600 +0.38%.  The 10-year Gilt lost 2.6 basis points. 

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BARCLAYS INCREASED ITS INTERIM DIVIDEND by 20 percent following strong performance from its trading division. The bank reported a 1.58 billion pound pre-tax profit for the second quarter of 2019 slightly down from last year. “We are accumulating capital at a very strong rate and we feel good about that,” Chief Executive Jes Staley said, ‘adding that a 9 pence full-year dividend would be the highest payout to Barclays shareholders since 2008.(USD) 6.5% 4/15/2022 Reg S 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,    Vodafone Group Plc (USD) 6.15% 2/27/2037  made some analysts' 'Conviction Buy' lists. (See the chart for  Vodafone Group bonds  below). Corey Mahoney


Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Italy 165 bp and Korea 28 bp. Sovereign wideners (5Y): China 40 bp and Panama 52 bp.

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New Issuance

New Issues New Issues [Continued]

1. Contourglobal Power Hldg SA (EUR) 4.125% 8/1/2025 (07/31/2019): 100MM First Lien Notes, Price at Issuance 106, Yielding 3.024%.

2. BNP Paribas (EUR) 0% 8/12/2022 (07/31/2019): 205MM Senior Unsecured Notes, Price at Issuance 100.423, Yielding -.14%.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 08/01/2019, 135.10 NAV as of 08/01/2019, 105.28
Daily NAV Change (%) +0.10% Daily NAV Change (%) +0.10%

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 ratecurrently 7.5% (seasonally adjusted, May 2019)
  • Eurostat's quarterly GDP: 0.4% (2019 Q1)
  • 6-month Euribor: current value -0.362%, as of 08/01/2019

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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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