EUROPEAN INVESTMENT GRADE BONDS EDGED OUT HIGH YIELD DEBT in net prices linked to actual trades.  In a report Deutsche Bank predicts Germany’s economy will deteriorate despite solid growth in the first quarter citing “several special factors” including weak auto demand abroad and escalating global trade tensions.  The 10-year Gilt rose 2.3 basis points.  FTSE 100 +0.16%, German DAX +0.88%, CAC 40+0.38%, STOXX Europe 600 +0.52%.

EUROPEAN CENTRAL BANK WARNS SEVERAL nations their banks should establish additional capital buffers to minimize risk during a downturn.  “The continued build-up of buffers could therefore be justified, especially in those countries where the long upturn may have led to an underestimation of credit risk or where private indebtedness is particularly high or rising,”  Stated ECB Vice President Luis de Guindos.  British Steel, England’s largest steel producer which employs 5,000 people is on the verge of bankruptcy.  The government will have to step in supplying a 30 million pound loan to salvage the failing company as one of its four largest lenders withdrew.  “The (company’s) cash was not big enough to sustain even one bank pulling the plug”.  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, Vodafone Group Plc (USD) 6.25% 11/30/2032 made some analysts' 'Conviction Buy' lists. (See the chart for Vodafone Group bonds below). Corey Mahoney (cmahoney@advantagedata.com).

Country	Maturity (Y)	Yield (%)	Previous (%)	Spread (bp)
Australia	10	1.686	1.652	-72.8
Belgium	10	0.409	0.385	-200.5
France	10	0.313	0.289	-210.1
Germany	10	-0.084	-0.101	-249.8
Italy	10	2.706	2.673		29.2
Japan	10	-0.047	-0.055	-246.1
Netherlands	10	0.106	0.086	-230.8
Portugal	10	1.056	1.048	-135.8
Spain	10	0.887	0.871	-152.7
Sweden	10	0.063	0.033	-235.1
U.K.	10	1.057	1.036	-135.7
U.S.	10	2.414	2.393	...

LATEST NEWS: Top moves, sovereign tighteners (5Y): Finland 12 bp and Germany 11 bp. Sovereign wideners (5Y): UK 29 bp and Spain 55 bp.

New Issues	New Issues [Continued]
1. CaixaBank (EUR) 2% 5/30/2029 (05/20/2019): 50MM Subordinated Notes, Price at Issuance 100, Yielding 2%. 2. Euronet Worldwide Inc. (EUR) 1.375% 5/22/2026 (05/20/2019):600MM Senior Unsecured Notes, Price at Issuance 99.524, Yielding 1.447%.

DATA CHECK:

iShares Core EUR UCITS	iShares Euro High Yield UCITS
NAV as of 05/21/2019, 131.67	NAV as of 05/21/2019, 103.51
Daily NAV Change (%) -0.14%	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 -0.241%, as of 05/20/2019

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