SEVERAL BANKS ARE CONFRONTED WITH EU ANTITRUST FINES for a multi-trillion dollar foreign exchange scheme, among the banks are Barclays, Citigroup, HSBC and JPMorgan. Interestingly, ‘U.S. regulators said the foreign exchange rate rigging was allegedly done through chat rooms with such names as “The Cartel,” “The Mafia” and “The Bandits’ Club,” through tactics with such names as “front running,” “banging the close,” “painting the screen” and “taking out the filth.”’ The Italian government may step in with state funds to recapitalize and salvage the quarreling Carige bank. 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, HSBC Holdings PLC (USD) 5.25% 3/14/2044 made some analysts' 'Conviction Buy' lists. (See the chart for HSBC Holdings PLC bonds below). Corey Mahoney (cmahoney@advantagedata.com).
Sovereign-Debt Snapshot
| Country | Maturity (Y) | Yield (%) | Previous (%) | Spread (bp) | |
|---|---|---|---|---|---|
| Australia | 10 | 1.725 | 1.746 | -73.3 | |
| Belgium | 10 | 0.438 | 0.420 | -202.0 | |
| France | 10 | 0.347 | 0.327 | -211.1 | |
| Germany | 10 | -0.047 | -0.042 | -250.5 | |
| Italy | 10 | 2.676 | 2.613 | 21.8 | |
| Japan | 10 | -0.046 | -0.051 | -250.4 | |
| Netherlands | 10 | 0.142 | 0.136 | -231.6 | |
| Portugal | 10 | 1.113 | 1.083 | -134.5 | |
| Spain | 10 | 0.983 | 0.957 | -147.5 | |
| Sweden | 10 | 0.067 | 0.113 | -239.1 | |
| U.K. | 10 | 1.126 | 1.138 | -133.2 | |
| U.S. | 10 | 2.458 | 2.484 | ... | |
Credit-Default Swap Market
New Issuance
| New Issues | New Issues [Continued] |
|---|---|
|
1. Erste Group Bank AG (EUR) FLT% 5/9/2024 (05/09/2019): 50MM Secured Notes, Price at Issuance 101.35. 2. Eaton Corp. (EUR) 0.697% 5/14/2025 (05/09/2019): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding .697%. |
ADI Indexes
| iShares Core EUR UCITS | iShares Euro High Yield UCITS |
| NAV as of 05/10/2019, 131.62 | NAV as of 05/10/2019, 103.9 |
| Daily NAV Change (%) 0.00% | Daily NAV Change (%) -0.18% |
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 Preliminary)
- 6-month Euribor: current value -0.231%, as of 05/09/2019
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