European Bond Research - July 19, 2019

Posted by Anna Pickett on Jul 19, 2019 11:53:37 AM
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NO-DEAL BREXIT COULD RAISE UK BORROWING to £60BN according to The Office for Budget Responsibility (OBR), which also assumed that a no-deal Brexit would cause a UK recession. According to the Office for National Statistics, public sector net borrowing totalled £7.2BN, which is up from £3.3BN in June 2018. FTSE 100 +0.16%, German DAX +0.22%, CAC 40 -0.09%, STOXX Europe 600 +0.08%.  

unnamed - 2019-07-18T115652.064

EUROPEAN CENTRAL BANK IS EXPECTED TO SIGNAL toward an easier monetary policy as the gloabl march toward lower interest rates reaches Europe, caused in part by the slowed global growth and increased protectionism. Deutsche Bank's planned sale of its prime brokerage unit to BNP Paribas is still in a preliminary stage as both parties are keeping an eye on hedge fund withdrawals. Since Deutsche Bank's restructuring declaration, hedge fund clients have pulled about $1B in assets per day since the July 7th announcement.  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,  Aon PLC (USD) 4.45% 5/24/2043 made some analysts' 'Conviction Buy' lists. (See the chart for Aon PLC below). Anna Pickett (


Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): UK 15 bp and China 43bp. Sovereign wideners (5Y): Ireland 28 bp and Sweden 12 bp.

unnamed - 2019-07-19T115141.154

New Issuance

New Issues New Issues [Continued]

1. Tesco Personal Finance (GBP) 3.5% 7/25/2025 (07/19/2019):250MM Senior Unsecured Notes.

2. JPMorgan Chase & Co. (EUR) 1.001% 7/25/2031 (07/19/2019):1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1%.

3. Efacec Capital SGPS SA (EUR) 4.5% 7/23/2024 (07/19/2019):58MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.5%.


ADI Indexes

unnamed - 2019-07-18T115657.384

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 07/19/2019, 134.15 NAV as of 07/19/2019, 105.01
Daily NAV Change (%) +0.15% Daily NAV Change (%) +0.18%

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 -0.353%, as of 07/18/2019

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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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