HSBC REPORTED A SPIKE IN NET PROFIT rising 31 percent from one year prior, “strong revenue growth” on the retail side attributed to the increase in profit. HSBC’s CFO Ewwn Stevenson expressed concerns with regards to the U.K. market, “If there’s one market in the world we’re watching closely for credit it would be the U.K. We have been growing the top line nicely but obviously Brexit uncertainty creates issues for business and consumer confidence and that’s what we’re seeing”. Michel Barnier the European Union’s Brexit negotiator stated “EU-27 stand united and ready for orderly Brexit”. 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, Societe Generale (USD) 5.625% 11/24/2045 Reg S made some analysts' 'Conviction Buy' lists. (See the chart for Societe Generale bonds below). Corey Mahoney (cmahoney@advantagedata.com).
Sovereign-Debt Snapshot
| Country | Maturity (Y) | Yield (%) | Previous (%) | Spread (bp) | |
|---|---|---|---|---|---|
| Australia | 10 | 1.797 | 1.791 | -74.9 | |
| Belgium | 10 | 0.466 | 0.446 | -208.0 | |
| France | 10 | 0.374 | 0.368 | -217.2 | |
| Germany | 10 | 0.032 | 0.016 | -251.4 | |
| Italy | 10 | 2.554 | 2.566 | 0.8 | |
| Japan | 10 | -0.029 | -0.029 | -257.5 | |
| Netherlands | 10 | 0.201 | 0.190 | -234.6 | |
| Portugal | 10 | 1.113 | 1.113 | -143.3 | |
| Spain | 10 | 0.992 | 1.005 | -155.5 | |
| Sweden | 10 | 0.155 | 0.162 | -239.1 | |
| U.K. | 10 | 1.189 | 1.153 | -135.7 | |
| U.S. | 10 | 2.546 | 2.503 | ... | |
Credit-Default Swap Market
New Issuance
| New Issues | New Issues [Continued] |
|---|---|
|
1. Hypo Noe Landesbank AG (CHF) 0.1% 11/27/2024 (05/02/2019):100MM Senior Unsecured Notes, Price at Issuance 100.021, Yielding .1%. 2. Silver Spring Asset Funding PLC (USD) 7% 5/7/2020 (05/02/2019):200MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7%. |
ADI Indexes
| iShares Core EUR UCITS | iShares Euro High Yield UCITS |
| NAV as of 05/03/2019, 132.04 | NAV as of 05/03/2019, 104.01 |
| Daily NAV Change (%) +0.04% | Daily NAV Change (%) -0.02% |
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 -0.232%, as of 05/02/2019
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