European Bond Research - July 2, 2019

Posted by Corey Mahoney on Jul 2, 2019 12:15:00 PM
MAJOR EU BANKS FACE A 135 BILLION EURO DEFICIT in order to comply with global capital requirements to be implemented in 2027 according to the Basel III, an international banking regulation standard in response to the 2008 financial crisis. Banks on average need to raise their capital by 24.4 percent in order to fully comply with the regulation. FTSE 100 +0.78%, German DAX +0.02%, CAC 40+0.16%, STOXX Europe 600 +0.35%.  The 10-year Gilt plummeted 7.8 basis points. 

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FRENCH SHIPPING GIANT CMA CGM announced they will drop the British flag from its fleet as Brexit risks persist.  “Due to the need for simplification of group structure and uncertainty of Brexit consequences, we concluded to exit UK.” The United Kingdom faced scrutiny after occurring a 50 million pounds loss after canceling ferry contracts in preparation of a no deal Brexit that never happned.  Euro zone producer prices slipped in May by 0.1 percent pulled lower by a significant drop in energy prices meanwhile prices for durable goods increased 1.4 percent. ADI (Advantage Data Inc.) extensive corporate-bond index data showed a net daily yield increment for high-yield versus high-grade 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): Ireland 27 bp and France 24 bp. Sovereign wideners (5Y): UK 30 bp and Spain 38 bp.

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New Issuance

New Issues New Issues [Continued]

1. Bank Julius Baer (Gg) (AUD) 1.01% 10/1/2019 (07/01/2019): 96MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.01%.

2. BKW FMB Energie AG (CHF) 0.25% 7/29/2027 (07/01/2019):200MM Senior Unsecured Notes, Price at Issuance 100.337, Yielding .21%.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 07/02/2019, 134.36 NAV as of 07/02/2019, 105.42
Daily NAV Change (%) +0.07%  Daily NAV Change (%) +0.09%

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 7.7% (seasonally adjusted, March 2019)
  • Eurostat's quarterly GDP: 0.4% (2019 Q1)
  • 6-month Euribor: current value -0.313%, as of 07/01/2019

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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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