European Bond Research - June 10, 2019

Posted by Corey Mahoney on Jun 10, 2019 12:12:45 PM
A TOP FRENCH REGULATOR believes it is time to reform the financial markets across the European Union reviewing and changing existing laws. Robert Ophele, chairman of AMF, France’s financial markets stated, “The time is ripe to think about the main areas of work and principles that should guide the action of EU legislators and regulators for the coming years.” FTSE 100 +0.60%, German DAX +0.77%, CAC 40 +0.33%, STOXX Europe 600 +0.22%. The 10-year Gilt rose 2.3 basis points.

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BRITAIN’S ECONOMY CONTRACTED FOR THE SECOND STRAIGHT MONTH on a significant decline in car production.  GDP dipped 0.4 percent in the month of April as automotive production slipped 2.7 percent month-over-month.  Rob Kent-Smith, head of GDP at the government statistic agency blames softening orders on Brexit stockpiling, “There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK’s original EU departure date has faded”.  The slowdown is a result of businesses stockpiling goods in the first quarter, the economy should pick up in the third quarter as companies return to normal buying schedules.  Surprisingly, the labor market has strengthened in a result of strong wage growth maintaining an unemployment rate near 50-year lows.  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, Petrobras Global Finance BV (USD) 8.75% 5/23/2026 made some analysts' 'Conviction Buy' lists. (See the chart for Petrobras Global Finance BV bonds below). Corey Mahoney (

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 1.482 1.479 -60.1  
Belgium  10 0.155 0.191 -192.7  
France  10 0.082 0.122 -200.0  
Germany  10 -0.254 -0.237 -233.6  
Italy  10 2.350 2.486   26.8
Japan  10 -0.115 -0.121 -219.7  
Netherlands  10 -0.092 -0.057 -217.4  
Portugal  10 0.618 0.669 -146.4  
Spain  10 0.551 0.612 -153.1  
Sweden  10 -0.081 -0.049 -216.3  
U.K.  10 0.817 0.827 -126.5  
U.S.  10 2.082 2.120 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Finland 12 bp and UK 29 bp. Sovereign wideners (5Y): France 29 bp and Sweden 12 bp.

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New Issuance

New Issues New Issues [Continued]

1. Cooperatieve Rabobank UA (NL) (USD) 1.88% 6/18/2024 (06/10/2019): 185MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.88%.

2. JP Morgan Chase Bank NA (USD) 0% 6/20/2049 (06/10/2019):70MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 06/10/2019, 132.6 NAV as of 06/10/2019, 103.81
Daily NAV Change (%) +0.05%  Daily NAV Change (%) +0.25%

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 7.7% (seasonally adjusted, March 2019)
  • Eurostat's quarterly GDP: 0.4% (2019 Q1)
  • 6-month Euribor: current value -0.256%, as of 06/07/2019

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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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