European Bond Research - June 27, 2019

Posted by Corey Mahoney on Jun 27, 2019 12:06:44 PM
INVESTMENT-GRADE EUROPEAN DEBT ROSE AGAINST its high-yielding junk bond counterparts in net prices linked to actual trades. German inflation chimed in at 1.6 percent remaining subdued, well below the European Central Bank’s June target of 2 percent. Euro zone economic sentiment fell to nearly a three year low suggesting the Central Bank will not raise rates this year. FTSE 100 +0.01%, German DAX +0.37%, CAC 40 +0.05%, STOXX Europe 600 +0.13%. The 10-year Gilt lost 0.05 basis points.

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FORD TO SLASH 12,000 JOBS AND CLOSE SIX-PLANTS IN EUROPE in an effort to reduce its manufacturing footprint by the end of 2020.  The company is aiming to turn a loss into a 6 percent profit in the coming years restructuring the European operations starting by reducing its workforce by 20 percent. Currently, the European “Ford will be a more targeted business in Europe, consistent with the company’s global redesign, generating higher returns through our focus on customer needs and a lean structure.” 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,   Coop Centrale Raif-Boeren (USD) 4.375% 8/4/2025 made some analysts' 'Conviction Buy' lists. (See the chart for Coop Centrale Raif-Boeren below). Corey Mahoney (


Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Finland 12 bp and Ireland 27 bp. Sovereign wideners (5Y): China 44 bp and Korea 32 bp.

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New Issuance

New Issues New Issues [Continued]

1. Bank Of Valletta (EUR) 3.75% 6/15/2031 (06/27/2019): 50MM Subordinated Notes, Price at Issuance 100, Yielding 3.75%.

2. AXA (EUR) 0.05% 7/5/2027 (06/27/2019): 1000MM Unsecured Notes.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 06/27/2019, 133.83 NAV as of 06/27/2019, 104.86
Daily NAV Change (%) +0.06%  Daily NAV Change (%) +0.17%

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 -0.311%, as of 06/26/2019

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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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