European Bond Research - September 12, 2019

THE EUROPEAN CENTRAL BANK FURTHER CUT INTEREST RATES and launched a new stimulus program purchasing 20 billion euros worth of bonds. ECB President Mario Draghi stressed confidence in the stimulus plan, “We have relevant headroom to go on for quite a long time at this rhythm without the need to raise the discussion about limits.” FTSE 100 -0.20%, German DAX +0.34%, CAC 40 +0.45%, STOXX Europe 600 +0.29%. The 10-year Gilt rose 2.1 basis points.

 

HIGH YIELD EUROPEAN BONDS ROSE AGAINST INVESTMENT GRADE DEBT in net prices linked to actual trades. Eurozone industrial production further declined in July slipping 2 percent year-over-year slightly less than the drop in June of 2.4 percent. (Advantage Data Inc.).  Extensive corporate-bond index data showed a net daily yield increment for high-grade versus high-yield constituents. High-yield bonds edged out high-grade debt as of 3 PM, London time.  Among European high-yield bonds showing a concurrence of top price gains at appreciable volumes traded,  Altice SA (USD) 7.625% 2/15/2025 Reg S made some analysts' 'Conviction buy' lists. (See the chart for Altice SA  bonds below). Corey Mahoney

 

LATEST NEWS: Top moves, sovereign tighteners (5Y): Korea 28 bp and UK 31 bp. Sovereign wideners (5Y): Denmark 10 bp and Finland 11 bp.

New Issues	New Issues [Continued]
1. Raiffeisen Bank Intl. AG (EUR) 0.6% 9/30/2030 (09/11/2019): 50MM Senior Unsecured Notes, Price at Issuance 100.25, Yielding .58%. 2. Aktia Bank PLC (EUR) 1.375% 9/18/2029 (09/11/2019): 70MM Subordinated Notes.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 09/12/2019, 135.04 NAV as of 09/12/2019, 104.13 Daily NAV Change (%) +0.39% Daily NAV Change (%) +0.47%

OVERALL EUROPEAN CREDIT MARKET:
The euro-zone economy shows signs of negative momentum, weakening credit rating quality, and uncertainty regarding the outcome of Brexit. Closely watched indicators and rates:

• Eurostat's unemployment rate: currently 7.5% (seasonally adjusted, May 2019)
• Eurostat's quarterly GDP: 0.4% (2019 Q1)
• 6-month Euribor: current value -0.408%, as of 09/11/2019

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