European Bond Research - June 25, 2019

Posted by Corey Mahoney on Jun 25, 2019 12:27:12 PM
BRITAIN’S AUTOMOTIVE INDUSTRY FEARS an abrupt Brexit will cripple the already deteriorated industry by adding billions of pounds in tariffs. The sector is facing its steepest downturn since 2012 with production in some plants grinding to a halt. “Leaving the EU without a deal would trigger the most seismic shift in trading conditions ever experienced by automotive.” FTSE 100 -0.04%, German DAX -0.32%, CAC 40 -0.05%, STOXX Europe 600 -0.12%. The 10-year Gilt slipped 2.3 basis points.

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FRENCH MANUFACTURING CONFIDENCE DECLINES IN JUNE from six-month highs as businesses become bearish with the overall economy.  Europe’s two largest economies Germany and France are showing signs of a slowdown; German business climate has deteriorated for the past three months.  The struggling Carige bank will require a capital injection of 800 million euros far exceeding previous estimates.  Carige bank will remain in limbo under the control of a special administration appointed by the European Central Bank until a solution is devised.  The Italian government has allocated 1.3 billion euros of aid in addition to guaranteeing 2 billion euros worth of bonds as emergency funding in January. ADI (Advantage Data Inc.) extensive corporate-bond index data showed a net daily yield increment for high-yield versus high-grade 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,  British Sky Broadcasting Group PLC (USD) 3.75% 9/16/2024 Reg S made some analysts' 'Conviction Buy' lists. (See the chart for British Sky Broadcasting Group PLC below). Corey Mahoney (

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Ireland 27 bp and UK 30 bp. Sovereign wideners (5Y): Greece 261 bp and Spain 39 bp.

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New Issuance

New Issues New Issues [Continued]

1. Erste Group Bank AG (EUR) 0.3% 8/5/2027 (06/24/2019): 50MM Senior Preferred Security, Price at Issuance 100, Yielding .3%.

2. Nykredit Realkredit AS (EUR) 0.625% 1/17/2025 (06/24/2019):500MM Senior Non Preferred Notes, Price at Issuance 99.485.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 06/25/2019, 134.01 NAV as of 06/25/2019, 104.51
Daily NAV Change (%) +0.01%  Daily NAV Change (%) -0.34%

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 -0.308%, as of 06/24/2019

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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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