European Bond Research - July 11, 2019

Posted by Corey Mahoney on Jul 11, 2019 12:10:24 PM
GERMAN INFLATION TICKED HIGHER moving closer to the European Central Banks target coming in at 1.5 percent in June.  Inflation across the euro zone has lagged behind the ECB’s target for years; Germany’s data is uplifting for the economy despite the ECB lowering growth estimates across the bloc.  Crude oil continues to climb amid a tightening supply and draws from stockpiles globally. FTSE 100 -0.35%, German DAX -0.45%, CAC 40 -0.23%, STOXX Europe 600 -0.18%.  The 10-year Gilt advanced 8.1 basis points.  

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EUROPEAN SHARES INITIALLY RISE following dovish remarks from the US Federal Reserve suggesting a rate cut later this month.  The Bank of England announced British banks are prepared for a no-deal Brexit holding enough capital to weather the storm but expect significant economic turmoil.  “In a disorderly Brexit, a range of UK asset prices would be expected to adjust sharply, tightening financial conditions for UK households and businesses.”   France approves a 3 percent tax targeting French revenues from technology giants including Google, Amazon, and Facebook.  The tax is estimated to generate upwards of 750 million euros from thirty companies globally. 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,  Actavis Funding SCS (USD) 3.45% 3/15/2022 made some analysts' 'Conviction Buy' lists. (See the chart for Actavis Funding SCS below). Corey Mahoney (

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): UK 29 bp and France 22 bp. Sovereign wideners (5Y): Italy 167 bp and Spain 38 bp.

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New Issuance

New Issues New Issues [Continued]

1. Westlake Chemical Corp. (EUR) 1.625% 7/17/2029 (07/10/2019):700MM Senior Unsecured Notes, Price at Issuance 99.498, Yielding 1.68%.

2. Banco de Sabadell SA (EUR) 0.875% 7/22/2025 Reg S (07/10/2019): 1000MM Senior Preferred Security, Price at Issuance 99.826, Yielding .905%.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 07/11/2019, 133.46 NAV as of 07/11/2019, 105.42
Daily NAV Change (-0.02%)    Daily NAV Change (%) +0.02%

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 -0.329%, as of 07/10/2019

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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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