European Bond Research - June 18, 2019

Posted by Corey Mahoney on Jun 18, 2019 12:17:00 PM
BREXIT IS TAKING ITS TOLL ON INVESTMENT IN BRITISH COMPANIES. Businesses are on track to slash investments by the most in 10 years as the economic future of the country looms. Focus has shifted away from long-term plans given uncertainties, “Businesses are putting resources into contingency plans, such as stockpiling, rather than investing in ventures that would positively contribute to long-term economic growth”. FTSE 100 +1.42%, German DAX +2.19%, CAC 40 +2.29%, STOXX Europe 600+1.81%. The 10-year Gilt lost 4.7 basis points.

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WAGES IN THE EURO ZONE INCREASED at the fastest rate on record in the first quarter indicating positive momentum for the bloc relieving concerns of an imminent downturn.  Salaries rose 2.5 percentduring the first three months while inflation slowed to 1.2 percent in May.  The Bank of England is expected to keep interest rates on hold following Thursday’s meeting despite warnings from senior officials of multiple rate increases this year. 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,  Danone (USD) 2.947% 11/2/2026 made some analysts' 'Conviction Buy' lists. (See the chart for Danone bonds below). Corey Mahoney (

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Italy 211 bp and Finalnd 12 bp. Sovereign wideners (5Y): France 26 bp and Ireland 29 bp.

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New Issuance

New Issues New Issues [Continued]

1. Fiserv Inc. (GBP) 2.25% 7/1/2025 (06/17/2019): 525MM Senior Unsecured Notes, Price at Issuance 99.415, Yielding 2.356%.

2. Legrand SA (EUR) 0.625% 6/24/2028 (06/17/2019): 400MM Senior Unsecured Notes.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 06/18/2019, 133.47 NAV as of 06/18/2019, 104.4
Daily NAV Change (%) +0.57%  Daily NAV Change (%) +0.72%

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 -0.268%, as of 06/17/2019

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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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