EUROPEAN JUNK BONDS SLIGHTLY edged out investment-grade debt in net prices linked to actual trades following a day after the European Central Bank’s decision to hold interest rates. ECB President Mario Draghi said the economic outlook is “getting worse and worse” referring to manufacturing dragging the economy lower. FTSE 100 +0.81%, German DAX +0.44%, CAC 40 +0.55%, STOXX Europe 600+0.31%. The 10-year Gilt lost 1.9 basis points. 

BRITISH TELECOM GIANT VODAFONE ANNOUNCED it will separate its mobile mast operations in 10 European markets into a new 18 billion euro company with a potential future IPO.  Vodafone spiked 10 percent on the news as the move would unlock value for shareholders. Consumer confidence in France hit a one-and-half year high in July meanwhile French automaker Renault reported a decline in profits slipping nearly 1 billion euros year-over-year from 2.04 to 1.05 billion.  In a statement, Renault announced, “Given the degradation in demand, the group now expects 2019 revenues to be close to last year’s,” rescinding assurance earlier this year to grow revenue in 2019. ADI (Advantage Data Inc.).  Extensive corporate-bond index data showed a net daily yield increment for high-grade versus high-yield constituents. High-yield bonds edged out high-grade debt as of 3 PM, London time.  Among European high-yield bonds showing a concurrence of top price gains at appreciable volumes traded,   Telecom Italia Capital SA (USD) 6.375% 11/15/2033  made some analysts' 'Conviction Buy' lists. (See the chart for Vodafone  below). Corey Mahoney (cmahoney@advantagedata.com).

 

LATEST NEWS: Top moves, sovereign tighteners (5Y): UK 29 bp and Korea 29 bp. Sovereign wideners (5Y): France 20 bp and Italy 154 bp.

New Issues	New Issues [Continued]
1. Banco Santander SA (GBP) 1.375% 7/31/2024 (07/25/2019):750MM Senior Preferred Security, Price at Issuance 99.395. 2. Vivion Investments SA R.L. (EUR) 3% 8/8/2024 (07/25/2019):700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3%.

DATA CHECK:

iShares Core EUR UCITS	iShares Euro High Yield UCITS
NAV as of 07/26/2019, 135.07	NAV as of 07/26/2019, 105.61
Daily NAV Change (%) +0.1%	Daily NAV Change (%) -0.12%

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 -0.368%, as of 07/25/2019

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