European Bond Research - May 9, 2019

Posted by Corey Mahoney on May 9, 2019 12:50:11 PM
EUROPEAN SHARES PLUMMETED ON THURSDAY AMID escalating trade tensions between U.S. and China. Beijing announced they would retaliate taking "necessary countermeasures" sending European automaker stocks lower. Shares of BMW and Daimler sank 3 percent. The 10-year Gilt dipped 1.2 basis points.  FTSE 100 -0.87%, German DAX -1.69%, CAC 40 -1.93%, STOXX Europe 600 -1.64%.

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BLACKROCK WITHDRAWS FROM A PROPOSED RESCUE PLAN OF ITALY’S CARIGE BANK citing no reason for pulling out. Blackrock was to inject 720 million euros into the bank with the support of other Italian banks taking a 43 percent stake in the rescue plan. In a statement Carige declared “We will evaluate other market solutions aimed at ensuring the stability and turnaround of Banca Carige,” in addition the bank might “request for a precautionary recapitalization to the economy ministry.”  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) 2.95% 5/25/2021 made some analysts' 'Conviction Buy' lists. (See the chart for HSBC Holdings PLC bonds below). Corey Mahoney (

Sovereign-Debt Snapshot

Country Maturity (Y) Yield (%) Previous (%) Spread (bp)
Australia 10 1.746 1.794 -73.7  
Belgium  10 0.420 0.417 -206.2  
France  10 0.327 0.330 -215.5  
Germany  10 -0.042 -0.036 -252.4  
Italy  10 2.613 2.586   13.1
Japan  10 -0.051 -0.050 -253.3  
Netherlands  10 0.136 0.142 -234.6  
Portugal  10 1.083 1.093 -139.9  
Spain  10 0.957 0.965 -152.5  
Sweden  10 0.113 0.115 -237.0  
U.K.  10 1.138 1.159 -134.4  
U.S.  10 2.482 2.458 ...

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. Virgin Media Secured Finance PLC (GBP) 5.25% 5/15/2029 Reg S (05/09/2019): 300MM Secured Notes, Price at Issuance 100, Yielding 5.25%.

2. Erste Group Bank AG (EUR) FLT% 5/9/2024 (05/09/2019): 50MM Secured Notes, Price at Issuance 101.35.


ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 05/09/2019, 131.62 NAV as of 05/09/2019, 102.9
Daily NAV Change (%) -0.23% Daily NAV Change (%) -0.41%

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 -0.230%, as of 05/08/2019

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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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