European Bond Research - May 8, 2019

Posted by Corey Mahoney on May 8, 2019 12:43:49 PM
EUROPEAN MARKETS WAVERED ON WEDNESDAY struggling for direction amid escalating global trade tensions. “Now we’re left wondering whether it will happen at all and what impact more tariffs will have on the global economy and markets. The next few days could be massive.” Craig Erlam market analyst at Oanda in London.  The British pound edged 0.47 percent lower against the dollar.  The 10-yearGilt dipped 2.3 basis points.  FTSE 100 +0.18%, German DAX +0.86%, CAC 40 +0.41%, STOXX Europe 600 +0.19%.

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GERMAN INDUSTRIAL CONGLOMERATE SIEMENS reported positive earning exceeding investor expectations surging more than 4 percent.  Siemens revealed plans to spin off its struggling gas and power unit to boost profit within the conglomerate. “We know that some competitors and rival CEOs had to experience what happens when you run out of options…We wanted to remain proactive and anticipate the transformation,” alluding to GE stated Joe Kaeser Siemens CEO.  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,  BP Capital Markets Plc (USD) 3.994% 9/26/2023 made some analysts' 'Conviction Buy' lists. (See the chart for BP Capital Markets bonds below). Corey Mahoney (

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 1.794 1.748 -65.5  
Belgium  10 0.417 0.453 -203.2  
France  10 0.330 0.366 -211.9  
Germany  10 -0.036 0.011 -248.4  
Italy  10 2.586 2.593   13.7
Japan  10 -0.050 -0.029 -249.9  
Netherlands  10 0.142 0.181 -230.7  
Portugal  10 1.093 1.117 -135.6  
Spain  10 0.965 0.981 -148.4  
Sweden  10 0.115 0.170 -233.4  
U.K.  10 1.159 1.221 -129.0  
U.S.  10 2.449 2.485 ...

Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): Belgium 23 bp and Netherland 12 bp. Sovereign wideners (5Y): France 27 bp and Sweden 11 bp.

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New Issuance

New Issues New Issues [Continued]

1. Liechtensteinische Landesbank Ag Vaduz (CHF) 0.125% 5/28/2026 (05/07/2019): 150MM Senior Unsecured Notes, Price at Issuance 100.384, Yielding .07%.

2. Car Inc. (USD) 8.875% 5/10/2022 (05/07/2019): 172MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.875%.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 05/08/2019, 131.92 NAV as of 05/08/2019, 103.32
Daily NAV Change (%) -0.13% Daily NAV Change (%) -0.22%

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 -0.229%, as of 05/07/2019

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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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