European Bond Research - May 29, 2019

Posted by Anna Pickett on May 29, 2019 1:43:48 PM
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AMIDST BREXIT CONCERNS, high import levels coupled with weak market demand in Europe has lead Arcelor Mittal to cut back it's steel making plants in France and Germany. Additionally, in a recent study conducted by the CBI, firms in the service sector reported weaker profits in recent month. Brexit "paralysis" is continuing to take a toll on the UK's service firms as stated by the CBI's deputy chief economist Anna Leach.

unnamed - 2019-05-29T134004.067

EUROSCEPTIC FRONT-RUNNER, Boris Johnson, to replace Prime Minister Theresa May after she announces her resignation has been ordered to appear in court over claims that he lied by about the UK giving the EU 350M euro a week. Sharp gains by anti-Brexit parties imply a greater chance of a secondreferendum or even a no Brexit deal at all. Scotland's pro-independence government, lead by First Minister, Nicola Sturgeon, aims to give visibility and comfort to the widespread discontent in Scotland over Britian's potential exit.  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 Plc bonds below). Anna Pickett (

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 1.545 1.532 -72.2  
Belgium  10 0.343 0.368 -192.4  
France  10 0.252 0.272 -201.4  
Germany  10 -0.158 -0.129 -242.4  
Italy  10 2.690 2.585   42.3
Japan  10 -0.071 -0.069 -233.8  
Netherlands  10 0.040 0.062 -222.7  
Portugal  10 0.919 0.956 -134.8  
Spain  10 0.792 0.810 -147.5  
Sweden  10 0.025 0.031 -224.2  
U.K.  10 0.919 0.958 -134.8  
U.S.  10 2.267 2.326 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Belgium 24 bp and Germany 11 bp. Sovereign wideners (5Y): Ireland 33 bp and Italy 228 bp.

New Issuance

New Issues New Issues [Continued]

1. Cooperatieve Rabobank U.A. (CHF) 0.25% 11/25/2027 (05/28/2019): 185MM Senior Unsecured Notes, Price at Issuance 100.125, Yielding .24%.

2. BNP Paribas Issuance BV (EUR) 0% 12/27/2019 (05/29/2019):100MM Secured Notes, Price at Issuance 100, Yielding 0%.

3. Met Life Global Funding Inc. (CHF) 0.125% 6/11/2027 (05/29/2019): 225MM Secured Notes, Price at Issuance 100, Yielding .13%.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 05/29/2019, 131.51 NAV as of 05/29/2019, 102.82
Daily NAV Change (%) -0.06% Daily NAV Change (%) -0.27%

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 -0.242%, as of 05/28/2019

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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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