European Bond Research - July 10, 2019

Posted by Corey Mahoney on Jul 10, 2019 12:10:48 PM
INVESTMENT-GRADE BONDS edged out high yield debt in net prices linked to actual trades. The UK economy rebounded after contracting 0.4 percent in April expanding by 0.3 percent in May lifted by a jump in auto production. “While all of this is ultimately a temporary phenomenon, the underlying growth story doesn’t look a whole lot better.” FTSE 100 -0.01%, German DAX -0.55%, CAC 40-0.10%, STOXX Europe 600 -0.19%. The 10-year Gilt rose 0.3 basis points. 

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THE EUROPEAN COMMISSION SLASHED ITS GROWTH estimate for the bloc to 1.2 percent this year down from 1.9 percent in 2018.   Increased trade uncertainties have spiked fear and “could also trigger a shift in global risk sentiment at times when valuations appear stretched across many asset classes.”  British recruiting firm PageGroup tumbled 15 percent after alerting investors profits will be lower than expected amid a hiring slowdown given Brexit uncertainties. 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) 5.25% 3/14/2044 made some analysts' 'Conviction Buy' lists. (See the chart for HSBC Holdings PLC below). Corey Mahoney (

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Ireland 26 bp and France 22 bp. Sovereign wideners (5Y): Spain 39 bp and Portugal 37 bp.

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New Issuance

New Issues New Issues [Continued]

1. Mediobanca Di Credito Finanz SpA (EUR) 1.125% 7/15/2025 Reg S (07/09/2019): 500MM Senior Preferred Security, Price at Issuance 99.631, Yielding 1.189%.

2. Rothesay Life Ltd. (GBP) 3.375% 7/12/2026 Reg S (07/09/2019):300MM Subordinated Notes.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 07/10/2019, 134.17 NAV as of 07/10/2019, 105.43
Daily NAV Change (-0.14%)    Daily NAV Change (%) +0.06%

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, May2019)
  • Eurostat's quarterly GDP: 0.4% (2019 Q1)
  • 6-month Euribor: current value -0.346%, as of 07/09/2019

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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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