BANKS ACROSS THE EURO BLOC ABRUPTLY TIGHTENED LENDING CONDITIONS in the second quarter of 2019 according to an ECB survey. "Lower risk tolerance and, for loans to enterprises, heightened risk perceptions, accompanied by higher cost of funds and balance sheet constraints, contributed to the tightening of credit standards across loan categories." UBS CEO Sergio Ermotti raises the alarm of a “very dangerous development” surrounding the balance sheets of central banks building “an asset bubble.” 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, Deutsche Bank AG (USD) 3.375% 5/12/2021 made some analysts' 'Conviction Buy' lists. (See the chart for Deutsche Bank AG below). Corey Mahoney (cmahoney@advantagedata.com).
Credit-Default Swap Market
New Issuance
| New Issues | New Issues [Continued] |
|---|---|
|
1. Cranbrook SA (EUR) 4% 1/31/2029 (07/23/2019): 58MM Senior Unsecured Notes, Price at Issuance 108, Yielding 3.03%. 2. Raiffeisen Bank Intl. AG (HUF) 1.6% 8/6/2024 (07/23/2019):20000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.6%. |
|
ADI Indexes
| iShares Core EUR UCITS | iShares Euro High Yield UCITS |
| NAV as of 07/23/2019, 134.52 | NAV as of 07/23/2019, 105.27 |
| Daily NAV Change (%) +0.13% | Daily NAV Change (%) +0.13% |
OVERALL EUROPEAN CREDIT MARKET:
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 rate: currently 7.5% (seasonally adjusted, May 2019)
- Eurostat's quarterly GDP: 0.4% (2019 Q1)
- 6-month Euribor: current value -0.361%, as of 07/22/2019
Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com
Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.