EUROPEAN EQUITIES WAVERED ON FRIDAY following the release of poor economic data from China.Industrial production grew 5 percent falling short of expectations of 5.5 percent, further signaling a global slowdown. The EU intends to implement rules to make it easier to restructure euro zone sovereign debt. Bonds issued after Jan 1, 2022, with maturities above one year would fall under the new measure. Debt holders of sovereign bonds will see a tremendous reduction in their power to block a restructuring deal. 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, Lloyds Banking Group PLC (USD) 4.05% 8/16/2023 made some analysts' 'Conviction Buy' lists. (See the chart for Lloyds Banking Group bonds below). Corey Mahoney (cmahoney@advantagedata.com).
Sovereign-Debt Snapshot
| Country | Maturity (Y) | Yield (%) | Previous (%) | Spread (bp) | |
|---|---|---|---|---|---|
| Australia | 10 | 1.413 | 1.438 | -67.6 | |
| Belgium | 10 | 0.181 | 0.183 | -190.9 | |
| France | 10 | 0.112 | 0.122 | -197.7 | |
| Germany | 10 | -0.239 | -0.237 | -232.9 | |
| Italy | 10 | 2.368 | 2.434 | 27.9 | |
| Japan | 10 | -0.110 | -0.111 | -219.9 | |
| Netherlands | 10 | -0.064 | -0.055 | -215.3 | |
| Portugal | 10 | 0.642 | 0.650 | -144.8 | |
| Spain | 10 | 0.543 | 0.573 | -154.7 | |
| Sweden | 10 | -0.110 | -0.093 | -220.0 | |
| U.K. | 10 | 0.839 | 0.871 | -125.1 | |
| U.S. | 10 | 2.090 | 2.118 | ... | |
Credit-Default Swap Market
New Issuance
| New Issues | New Issues [Continued] |
|---|---|
|
1. Total Capital SA (CHF) 0.166% 12/21/2029 (06/13/2019): 200MM Senior Unsecured Notes, Price at Issuance 100, Yielding .166%. 2. Investor AB (EUR) 1.5% 6/20/2039 (06/13/2019): 500MM Senior Unsecured Notes, Price at Issuance 99.863, Yielding 1.508%. |
|
ADI Indexes
| iShares Core EUR UCITS | iShares Euro High Yield UCITS |
| NAV as of 06/14/2019, 132.73 | NAV as of 06/14/2019, 103.44 |
| Daily NAV Change (%) +0.14% | Daily NAV Change (%) +0.18% |
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 7.7% (seasonally adjusted, March 2019)
- Eurostat's quarterly GDP: 0.4% (2019 Q1)
- 6-month Euribor: current value -0.259%, as of 06/13/2019
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