European Bond Research - June 21, 2019

Written by Anna Pickett | Jun 21, 2019 4:07:27 PM

Still 150,000 businesses do not have the proper paperwork needed in order to continue exporting to the EU in the event of a no-deal Brexit. While many have built up contingency stocks, these are estimated to only last a few weeks and so businesses will be reliant on what the governments are able to do to keep the ports open. However, it was noted that the financial system is prepared for a no-deal outcome. FTSE 100 -0.38%, German DAX -0.20%, CAC 40 -0.19%, STOXX Europe 600 -0.40%.

Over the next month, Tory members will decide whether Jeremy Hunt or Boris Johnson becomes the party leader and Prime Minister after Prime Minister Theresa May departure; currently Mr. Johnson is the favourite. In addition to continued Brexit concerns, rising tensions between the US and Iran contributed to a halt in European stock market gains on Friday. ADI (Advantage Data Inc.) extensive corporate-bond index data showed a net daily yield increment for high-yield versus high-grade constituents. High-yield bonds edged out high-grade debt as of 3 PM, London time. Among European high-grade 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 Telecom Italia Capital SA below). Anna Pickett (apickett@advantagedata.com).

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Germany 12 bp and France 25 bp. Sovereign wideners (5Y): Genmark 12 bp and Italy 196 bp.

New Issuance

New Issues	New Issues [Continued]
1. RCI Banque SA (CHF) 0.5% 7/18/2024 (06/20/2019): 170MM Senior Unsecured Notes, Price at Issuance 100.197, Yielding .46%. 2. Natixis (EUR) 1.35% 6/26/2039 (06/20/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.35%. 3. Cogent Communications Group Inc. (EUR) 4.375% 6/30/2024 Reg S (06/20/2019): 135MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.38%.

New Issues

New Issues [Continued]

1. RCI Banque SA (CHF) 0.5% 7/18/2024 (06/20/2019): 170MM Senior Unsecured Notes, Price at Issuance 100.197, Yielding .46%.

2. Natixis (EUR) 1.35% 6/26/2039 (06/20/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.35%.

3. Cogent Communications Group Inc. (EUR) 4.375% 6/30/2024 Reg S (06/20/2019): 135MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.38%.

ADI Indexes

DATA CHECK:

iShares Core EUR UCITS	iShares Euro High Yield UCITS
NAV as of 06/21/2019, 134.02	NAV as of 06/21/2019, 104.87
Daily NAV Change (%) -0.09%	Daily NAV Change (%) -0.01%

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 -0.303%, as of 06/20/2019

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.

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