European Bond Research - June 20, 2019

Posted by Corey Mahoney on Jun 20, 2019 12:35:34 PM
THE ITALIAN GOVERNMENT PROPOSES to use 5.2 billion euros in order to reduce the budget deficit for 2019 and avoid EU financial sanctions. Crude oil prices surge following Iran shooting down a US military surveillance drone in the Strait of Hormuz rattling the oil markets. The pound rose 0.44 percent against the dollar and slipped 0.25 percent against the euro. FTSE 100 +0.62%, German DAX +0.80%, CAC 40+0.71%, STOXX Europe 600 +0.64%. The 10-year Gilt lost 4.8 basis points. 

unnamed - 2019-05-29T134004.067

UK RETAIL SALES DECLINED IN MAY for the second straight month due to poor weather conditions delaying shoppers from buying summer clothing.  Sales volume shrunk by 0.5 percent in contrast to one-year prior sales increased by 2.3 percent.  “We see quite a mixed picture across the rest of the sector as the decline in department store sales continued (in the three months to May), with no growth since September of last year.”  The Bank of England slashes second-quarter growth amid intensifying global trade tension and domestic uncertainty with Brexit. 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,  Actavis Funding SCS (USD) 4.85% 6/15/2044 made some analysts' 'Conviction Buy' lists. (See the chart for Actavis Funding SCS  bonds below). Corey Mahoney (

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Finland 12 bp and Korea 32 bp. Sovereign wideners (5Y): Spain 32 bp and Germany 11 bp.

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New Issuance

New Issues New Issues [Continued]

1. TAP SGPS SA (EUR) 4.375% 6/23/2023 (06/19/2019): 200MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.38%.

2. Volvo Treasury AB (SEK) FLT% 6/28/2021 (06/19/2019): 2000MM Senior Unsecured Notes.


ADI Indexes

iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 06/20/2019, 133.95 NAV as of 06/20/2019, 105.13
Daily NAV Change (%) +0.29%  Daily NAV Change (%) +0.59%

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 -0.299%, as of 06/19/2019

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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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