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Government Bond Data Report Q3 2019
17 Dec 2019
AFME is pleased to circulate itsQ3 2019 Government Bond Data Report. This report provides a comprehensive data source with updated statistics on the Government bond primary and secondary markets in Europe (EU28). Report highlights include: The highest third quarter traded volume since 2014 was observed during 3Q19, according to Trax data The average bid-cover ratio(demand/amount allocated) was 2.14 in 3Q19, a slight increase of 0.81% (YoY) from 3Q18 and a -8.06% decrease QoQ from the multi-year high recorded in 2Q19. During 3Q19 there were3 long-term credit rating upgrades for EU countries(following 2 in 2Q19 and 5 in 1Q19) and no downgrades, bringing the year to date total to 14 upgrades and no downgrades (there were 4 further upgrades in 4Q19 to date). Following 5 Primary Dealers leaving the market in 2019 to date, theaverage number of EU Primary Dealers is equal to the lowest number on record, we look at country specific trends in more detail. EU weighted average coupon rates of outstanding sovereign debt falls by 61bp since early 2016. The 13bp fall in EU weighted average coupon rates in the first three quarters of 2019 is already greater than the annual drop of 8bp observed during 2018. Outstanding amount of EU green government bonds reaches EUR 39 bn. Q3 2019 marks the first time green market activity took place in a third quarter of the year.
Prudential Data Report 3Q 2019
11 Dec 2019
This report collates timely information on EU GSIBs’ prudential capital, leverage and liquidity ratios with updated information as at 30 September 2019. It also illustrates the recent performance of the debt and contingent convertibles (CoCo) markets and the funding structure for banks in Europe as of late November 2019. Among the main findings of this report: EU GSIBs end-point CET1 ratio increased to 13.3% in 3Q19, from 13.1% in 4Q18. During the latest quarter, earnings retention contributed 18bps to the CET1 ratio variation. TLAC ratio stood at 25.6% relative to RWAs and 8.2% as a percentage of leverage exposure TLAC ratios (a new addition to the report) stood comfortably above the minimum required by the FSB global standards (16% of RWAs and 6% of leverage exposure measure). As of 3Q2019, EU GSIBs have accumulated a total of c€1.2tn of TLAC including own funds and eligible liabilities. End-point Tier 1 ratios increased to 15.0% in 3Q19, from 14.8% in 4Q18. End-point Leverage ratios (LR) declined to 4.7% in 3Q19 from 4.8% in 4Q18. Liquidity Coverage Ratio (LCR) declined to 138.4% on a weighted average basis in 3Q19, from 142.4% in 4Q18. The amount of new capital raised during 2019YtD by EU banks totalled €26.2 bn, €3.8bn above the amount raised in 2018FY. The amount of fresh capital raised was almost exclusively in the form of contingent convertible (CoCo) bonds. Coupon rates of newly originated CoCos have decreased on a weighted average basis to 5% in 4Q19 (from 7.1% in 4Q18) on the back of lower risk-free long-term yields and higher credit ratings of the recently issued instruments. New GSIB list:The Financial Stability Board (FSB) updated on Nov-19 the list of globally systemically important banks (GSIBs). One EU bank moved from bucket 3 (2% CET1 capital surcharge) to bucket 2 (1.5% surcharge). Since 2012, the number of EUGSIBs has declined from 14 to 11 in 2019. These changes have also signified, on a weighted average basis, lower GSIB capital surcharges for global EU banks. BOX: Capital Markets Union: Key Performance Indicators: Pages 22-33 summarise the main findings of a recent AFME report on Capital Markets Union (CMU) Key Performance Indicators (KPIs), produced in collaboration with ten other trade associations and international organisations. The report assesses the EU’s progress against 8 KPIs across the 8 political priorities of the CMU, including a country-by-country comparison of individual EU Member State progress against the CMU’s objectives. Compared to last year’s report, the findings show mixed results, with some indicators showing a positive trajectory while others have deteriorated or remained neutral. o Europe is a global leader in sustainable finance, representing 43% of global issuance of sustainable bonds in 2018 (vs. 16% in the United States and 18% in China), with the Euro as the most popular denomination of choice. o Europe’s reliance on bank lending has increased in recent years. EU companies continue to over rely on bank lending, with 88% of their new funding in 2018 coming from banks and only 12% from capital markets – (14% on average in 2013-2017). o The EU lags behind other jurisdictions on FinTech funding – EU27 FinTech companies have only benefited from €6.3bn in investments since 2009, compared with €105bn in the US and €20.8bn in China.
European High Yield and Leveraged Loan Report: Q3 2019
19 Nov 2019
The Report contains European leveraged finance market trends for the third quarter of 2019, which includes issuance and credit performance figures for the high yield and leveraged loan markets. European leveraged finance issuance (leveraged loans and high yield bonds) increased to €66.4 billion in 3Q’19, a 1.7% increase from €65.3 billion in 2Q’19 and a 19.5% increase from €55.5 billion in 3Q’18. Primary high yield issuance totaled €30.3 billion on 53 deals in 3Q’19, a 3.8% increase from €29.2 billion on 71 deals in 2Q’19 and a 71.2% increase from €17.7 billion on 46 deals in 3Q’18 The proportion of USD-denominated issuance increased slightly to 30.9% of all issuance in 3Q’19, up from 28.6% in 2Q’19 and up from 20.3% in 3Q’18. The leading use of proceeds for high yield bonds issuance in 3Q’19 were general corporate purposes with €11.6 billion. Leveraged loan issuance, including first lien, second lien, and mezzanine financing, totaled €36.0 billion on 52 deals in the 3Q’19, unchanged in volume from €36.0 billion on 69 deals in 2Q’19, but a 4.7% decrease from €37.8 billion on 66 deals in 3Q’18 Nearly half (43.9%) of deals financed in the third quarter of 2019 were issued for refinancing and/or repayment of debt, down from 71.2% in 2Q’19 but up from 23.5% in 3Q’18 Pricing spreads for institutional loans tightened by 11 basis points (bps) q-o-q but widened by 50 bps y-o-y. Spreads for pro rata loans tightened by 28 bps q-o-q and by 18 bps y-o-y. Credit quality: S&P reported the trailing 12-month speculative-grade default rate at 2.1% as of September 19, a decrease from 2.3% in June 2019 and unchanged from 2.1% in September 2018. Moody’s reported the trailing 12-month speculative-grade default rate at 1.2% in September 2019, up slightly from 1.1% in June 2019 but down from 2.4% in September 2018 Three bond-related defaults were reported in the third quarter of 2019, all in developed market Europe. Two firms defaulted due to filing banktrupcy and one due to missed interest payment. According to S&P, in 3Q’19 downgrades exceeded upgrades in developed market Europe (36 downgrades and 14 upgrades), a much worse ratio than 25 downgrades and 27 upgrades in 2Q’19 and worse than 17 downgrades and 19 upgrades in 3Q’18
AFME Securitisation Data Snapshot: Q3 2019
14 Nov 2019
AFME is pleased to circulate the European Securitisation Data Snapshot for Q3 2019 Key highlights: Q3 2019 European Issuance In Q3 2019, EUR 40.4 bn of securitised product was issued in Europe, a decrease of 33.4% from Q2 2019 (EUR 60.7 bn) and a decrease of 25.0% from Q3 2018 (EUR 53.9 bn) Of this, EUR 31.1 bn was placed, representing 77.0% of the total, compared to EUR 27.7 bn placed in Q2 2019 (representing 45.6% of EUR 60.7 bn) and EUR 30.0 bn placed in Q3 2018 (representing 55.7% of EUR 53.9 bn) In Q3 2019, PanEuropean CLOs led placed totals followed by UK Residential Mortgage-Backed Securities (RMBS) and German Auto ABS: PanEuropean CLOs increased from EUR 9.7 bn in Q2 2019 to EUR 11.9 bn in Q3 2019. UK RMBS increased from EUR 6.4 bn in Q2 2019 to EUR 6.5 bn in Q3 2019 German Auto ABS increased from EUR 1.4 bn in Q2 2019 to EUR 3.0 bn in Q3 2019
AFME Equity Primary Markets and Trading Report Q3 2019
14 Nov 2019
AFME is pleased to circulate its Equity Primary Markets and Trading Report for the third quarter of 2019 (3Q 2019). The report provides an update on the performance of the equity market in Europe in areas such as primary issuance, Mergers and Acquisitions (M&A), trading, and equity valuations. Key highlights: Equity underwriting on European exchanges accumulated a total of €86.3 bn in proceeds in the first three quarters of 2019, a 14% decrease from the value originated in the same period of 2018 (€100.2 bn). IPO issuance in 2019YtD decreased 36% against the amount issued in the first three quarters of 2018. IPOs on Junior markets totalled €0.9 bn in proceeds in 2019YtD, the lowest YtD amount since 2013 103 IPOs have been issued on European exchanges during the first three quarters of 2019—the lowest YtD number since 2013 (102). Completed Mergers and Acquisitions (M&A) of European companies totalled €693 bn in 2019YtD, a decrease of 12% from 2018YtD (€790.5 bn), driven by a 43% decline in Outbound M&A (i.e. acquisition of non-European firms by European firms) The amount of announced M&A deals totalled €676.4 bn in 2019YtD, a 26% decrease from 2018YtD. Private Equity-backed M&A activity (“Sponsor” deals) totalled €43bn in 3Q 2019— a decline of 36% YoY and also the lowest quarterly amount since 2014 Q2. Equity trading activity on European main markets and MTFs generated a total of €7.0 tnin turnover value in 2019YtD, a decrease of 15% from 2018YtD (€8.3tn) Update on MiFID II dark trading caps: The Double Volume Cap (DVC) mechanism seeks to limit the total dark trading of equity-like instruments on EU venues ESMA publishes on a monthly basis the list of instruments temporarily banned from dark trading at the EU or trading venue level after surpassing pre-determined dark trading thresholds The number of instruments banned from dark trading has decreased since the DVC mechanism was launched, from 755 in March 2018 and from 1,262 in August 2018 to 376 in October 2019 (c1% of the Universe of 27,649 equity and equity-like instruments). 2019 YtD variation of European Equity activity EU28 member countries and Switzerland
Prudential Data Report 2Q 2019
9 Oct 2019
This report collates timely information on EU GSIBs’ prudential capital, leverage and liquidity ratios with updated information as at 30 June 2019. It also illustrates the recent performance of the debt and contingent convertibles (CoCo) markets and the funding structure for banks in Europe as of September 2019. Among the main findings of this report: EU GSIBs end-point CET1 ratio stood at 13.2% in 2Q19, slightly above 13.1% in 4Q18. During the latest quarter, earnings retention contributed 22bps to the CET1 ratio variation. This increase was offset 9bps by an increase in RWAs by 7 of the 11 banks as a consequence of business growth (most predominantly credit risks and bank-specific factors like an update of regulatory models and global markets RWA variations). End-point Tier 1 ratios increased to 14.9% in 2Q19, from 14.8% in 4Q18. End-point Leverage ratios (LR) declined to 4.7% in 2Q19 from 4.8% in 4Q18. Liquidity Coverage Ratio (LCR) declined to 140% on a weighted average basis in 2Q19, from 142.4% in 4Q18. Capital Capital raising above 2018FY level: The amount of new capital raised during 1H 2019 by EU banks totalled €23.6 bn, €2bn above the amount raised in 2018FY. 36 European banks have issued CoCo instruments in 2019 YtDincluding 9 European GSIBs (vs 37 in 2018FY including 9 European GSIBs) accumulating a total issued amount of €28bn during the year. Coupon rates of newly originated CoCos have declined 170bps YtD on the back of lower risk-free benchmark rates. Bail-inable bonds: EU GSIBs have continued to issue bail-inable senior non-preferred bonds, accumulating a total stock of €141.9bn as of September 2019, representing between 1.2% and 5.7% of EU GSIBs RWAs, as banks continue to prepare for the implementation of TLAC/MREL requirements. Basel III:The EBA published in August 2019 the first part of its advice on the EU implementation of Basel III, which includes a quantitative impact analysis, and a set of policy recommendations. According to EBA estimates, the full implementation of Basel III will increase the minimum capital requirement (MRC) by 24.4% on average. The Introduction of output floor (+9.1%) is the main driver of impact, followed by changes on CVA and operational risk. Most of the capital impact occurs in large globally active banks (28.6%), while the impact on small banks is limited to 5.5% MRC. After the publication of the EBA CfA, the European Commission is preparing a legislative proposal. A public hearing will be organised on 12 November in Brussels. AFME’s understanding is that the current planning for the legislative proposal isQ2 2020, despite the second part of the EBA CfA possibly delayed until year-end. The European Commission is internally reflecting on whether to include any topics in the CRR/CRD proposals which go beyond Basel III implementation.
Government Bond Data Report Q2 2019
24 Sep 2019
This report provides a comprehensive data source with updated statistics on the Government bond primary and secondary markets in Europe (EU28). Report highlights include: Average daily trading volumes of European government bonds increased 13% YoY during 2Q19, driven by a significant increase in trading of French (37% YoY), Finnish (27% YoY) and Portuguese (22% YoY) bonds. European Government bond and bills gross issuance totalled €590.8 bn in 2Q19, an increase of 0.7% from the volume issued in 2Q18 (€586.9 bn) and 14% below the volume issued in 1Q19 (€686 bn). During 2Q19 there were 4 long-term credit rating upgrades for EU countries (following 5 in 1Q19) and no downgrades, bringing the year to date total to 9 upgrades and no downgrades The average bid-cover ratio (demand/amount allocated) was 2.33 in 2Q19, an increase of 17bps from 2Q18 and also from 1Q19. This is the highest average bid-cover ratio recorded in Europe since Q3 2014. A total of €8 bn in sovereign green bonds were issued in 2Q19, the greatest quarterly change to date. This was driven by a re-opening of a green bond in France and a €6 bn green bond issued by the government of the Netherlands, increasing the total outstanding amount of EU sovereign green bonds to €36 bn.
AFME Q2 2019 Securitisation Data Report
23 Sep 2019
AFME is pleased to circulate its Q2 2019 Securitisation Data Report. Main findings: In Q2 2019, EUR 60.7 billion of securitised product was issued in Europe, an increase of 87.7% from Q1 2019 but a decline of 10.8% from Q2 2018. Of the EUR60.7 billion issued, EUR 27.7 billion was placed, representing 45.6% of issuance, compared to the 50.9% of issuance in Q1 2019 and the 56.3% of issuance in Q2 2018. Outstanding volumes rose slightly to EUR 1.25 trillion outstanding at the end of Q2 2019, an increase of 4.6% QoQ and 3.9% YoY. Credit Quality: In Europe, upgrades outpaced downgrades in Q2 2019, with upgrades concentrated in RMBS, both conforming and non-conforming. ABCP TrendsEuropean asset backed commercial paper (ABCP) issuance was EUR 149.9 billion in Q2 2019, a decrease of 5.4% QoQ but a 37.0% increase YoY. Multiseller conduits continue to dominate as the largest category of issuer in the ABCP market, particularly from France and Ireland. Regulatory update: Good progress has been made on the regulatory technical standards (RTS) on homogeneity of the underlying exposures in securitisation, which have been adopted by the European Commission (the Commission) in May 2019. There has been considerable progress in the sterling markets in the transition to risk-free rates with SONIA now the market norm for new issuance of sterling floating rate notes (FRNs). The volume of SONIA linked securitisations has experienced significant growth since the market opened in April of this year with £17.4 billion issued to date.
Summary of the Methodologies
19 Sep 2019
Summary of the Methodologies Government Bond Data Report 1. Issuance 1.1. – 1.4. Government bond issuance by type, region and currency The charts aggregate central government gross debt issuance volumes originated by EU28 member states. It excludes debt issued by government agencies and Central Banks. Issuance data of Eurozone member states are sourced from the European Central Bank (ECB) “Debt securities issued by euro area residents by original maturity; currency and sector of the issuer” report with “Central Government” as the basis of aggregation. The data are availablehere. Issuance volumes of non-Eurozone member states are sourced from national Debt Management Offices (DMO), Central Banks and Ministries of Finance depending on data availability. More specifically: UK Debt Management Office Sweden Riksgalden Poland Finanse Hungary ÁKK Denmark National Banken Czech Republic CNB Croatia Ministry of Finance Bulgaria Ministry of Finance Data are aggregated in Euros by converting the original values of non-Euro volumes using the relevant daily currency pair exchange rate as published by the ECB. Data availablehere. For Charts 1.1 and 1.2, “Bills” refer to central government debt securities issued with a tenor of 1 year or less, while “Bonds” relate to central government debt securities issued with a tenor of above 1 year. 1.5. – 1.6. Net sovereign debt issuance Net issuance relates to gross issuance volumes originated by central governments net of redemptions during the relevant period. As in 1.1-1.4, the data excludes debt securities issued by agencies and other related general government securities. For Eurozone member states, data are sourced from the ECB’s “Debt securities issued by euro area residents by original maturity; currency and sector of the issuer” report with “Central Government” as the basis of aggregation. For UK net issuance, data are sourced from the UK Debt Management Office according to the “Monthly Gross and Net Issuance report” availablehere. 2. Auctions and Primary Dealers 2.1. – 2.7. Bid-cover ratios Bid-cover ratios data is sourced from Thomson Reuters Eikon for 10 jurisdictions (selected based on overall outstanding debt size and auction data quality). Where the data is not in Euros, it is converted using the relevant exchange rate from the ECB as in 1.1–1.4. 2.8.- 2.10. European Primary Dealers The number of European primary dealers are sourced from AFME’s Primary Dealers handbooks as published for the relevant period, and from AFME’s regularly updated Primary Dealers list for the counterparty type definitions under the Harmonised Reporting Format (or “HRF table”). In Belgium, the list also aggregates “Recognised Dealers” in the total number of Primary Dealers. In Germany, members of the “Bund Issues Auction Group” are aggregated. Technically, there are no primary dealers but banks which are members of the auction group. In the Netherlands, the list also aggregates “Single Market Specialists” in the total number of Primary Dealers. 3. Outstanding 3.1. Outstanding debt securities issued by central governments 2009-2015 outstanding volumes are sourced from the ECB “Debt securities outstanding (Securities other than shares, excluding financial derivatives). 1Q16 and 2Q16 outstanding volumes are sourced from Thomson Reuters Eikon (see section 3.2-3.6 for the methodology and aggregation basis). 3.2. – 3.8. European Government bonds outstanding The charts display outstanding central government gross debt volumes originated by EU28 member states. It excludes debt issued by government agencies and Central Banks. The data is sourced from Thomson Reuters Eikon and is required to have a maturity date, issue date and issue amount in order to be included. The data was sourced with issue amounts in US Dollars and so was converted to Euros using the relevant exchange rate from the ECB as in 1.1–1.4. The credit ratings used in 3.6 are the long term foreign currency issuer credit ratings and are sourced from Standard and Poor’s as reported by Thomson Reuters Eikon at the end of the relevant quarter. 4. Credit Quality 4.1. – 4.4 Credit ratings in selected European jurisdictions Charts 4.1-4.4 aggregate the long-term credit rating in foreign currency of EU 28 member states as rated by Standard and Poor’s. Data were retrieved from Thomson Reuters Eikon but primarily sourced from Standard and Poor’s. 4.5.-4.6. Relationship between S&P long-term credit ratings and CDS and OAS Chart 4.3 illustrates the relationship between S&P long-term credit ratings in foreign currency as described in charts 4.1-4.2, with sovereign Credit Defaults Swap rates. Credit ratings are sourced from Standard and Poor’s as reported by Thomson Reuters Eikon as of the end of the relevant quarter. CDS data are sourced from Deutsche Bank’s web-based platform “Sovereign default probabilities online” availablehere. For purposes of comparability, the CDS spreads assume a recovery rate of 40% across all jurisdictions. Chart 4.4 illustrates the relationship between S&P long-term credit ratings in foreign currency and Option-Adjusted spreads (OAS). OAS are sourced from Barclays Capital. 4.7. European rating actions Rating actions on long-term foreign currency ratings of EU28 member states as rated by Standard and Poor’s, Fitch and Moody’s. Changes to credit outlooks are not aggregated. The column “rationale” is a summary of the main drivers behind the respective rating actions as per the agencies’ press releases and detailed ratings reports. 5. Trading volumes and turnover ratio 5.1. – 5.19 Trading volumes and turnover ratio The charts display secondary market daily average trading volumes and turnover ratios for the selected jurisdictions. The turnover ratio is equal to the daily average trading volume divided by the total outstanding debt volume for the country at the time of the trading. Trading volumes are sourced from Trax, a MarketAxess subsidiary, national Debt Management Offices (DMO), Central Banks and Ministries of Finance depending on data availability. Trax data includes Government & Sovereign bond volumes for EU28 member states as per the AFME methodology. The volumes are calculated by converting the individual traded securities to EUR using the prevailing exchange rate on the date of each trade. ADV calculated by dividing the total converted volume by the number of UK trading days for quarter. Secondary Market Volumes (please note this is restricted to 2013-Q3 onwards as split not available prior to this date). Publicly available sources are: UK Debt Management Office Belgian Debt Agency Italian Dipartimento del Tesoro Deutsche Finanzagentur Portugese Agência de Gestão da Tesouraria e da Dívida Pública – IGCP Tesoro Público de España Finland Valtiokonttor Bank of Greece Irish Stock Exchange Polish Finance Hungarian ÁKK Romanian Ministerul Finantelor Publice: 6. Valuations 6.1. Selected European 10Y benchmark yields The chart aggregates the end-of-month sovereign 10Y benchmark yield rates in selected European jurisdictions (United Kingdom, Sweden, Poland, Spain, Denmark and the Euro zone benchmark). The Euro zone yield rate is sourced from the ECB and relates to the AAA-rated benchmark sovereign interest rate for a 10-year tenor. The yields for the other jurisdictions are sourced from Thomson Reuters Eikon. 6.2. Sovereign spot yield curve Spot yield curve for jurisdictions for the 1 to 10 years maturities as of the selected period. All data points are sourced from Thomson Reuters Eikon. 6.3. Slope of the sovereign debt yield The chart aggregates the difference between 1 year and 10-year spot rates in the selected jurisdictions. The slope of the Euro zone curve is sourced from the ECB and relates to the slope of AAA-rated benchmark sovereign yields. The slopes of the other jurisdictions are sourced from Thomson Reuters Eikon. 6.4. Implied inflation expectations in the Euro zone The chart aggregates the historic market-implied HICP inflation expectation of the Euro zone for 1 and 5 years ahead. Specifically, EUIL1YF1Y=R and EUIL5YF5Y=R contracts retrieved from Thomson Reuters Eikon. 6.5. Overnight index swap (OIS) yield curve The chart aggregates the OIS yield curve in the respective jurisdictions, illustrating the market-implied expectations of future changes in the central banks’ policy rates. All data points are sourced from Thomson Reuters Eikon and retrieved during the disclosed day. 6.6. 5Y Sovereign Credit Default Swap The chart aggregates historic 5Y CDS spreads for selected jurisdictions. For purposes of comparability, the CDS spreads assume a recovery rate of 40% across all jurisdictions. Data are sourced from Deutsche Bank’s web-based platform “Sovereign default probabilities online”.
European High Yield & Leveraged Loan Report: Q2 2019
2 Sep 2019
The Report contains European leveraged finance market trends for the second quarter of 2019, which includes issuance and credit performance figures for the high yield and leveraged loan markets. Key highlights: European leveraged finance issuance (leveraged loans and high yield bonds) increased to €59.9 billion in 2Q’19, a 31.6% increase from €45.5 billion in 1Q’19 but a 21.4% decrease from €76.2 billion in 2Q’18. Primary high yield issuance totaled €29.0 billion on 69 deals in 2Q’19, a 69.5% increase from €17.1 billion on 39 deals in 1Q’19 and a 14.2% increase from €25.4 billion on 61 deals in 2Q’18.The proportion of USD-denominated issuance decreased to 28.4% of all issuance in 2Q’19, down from 34.8% in 1Q’19 but up from 21.5% in 2Q’18.The leading use of proceeds for high yield bonds issuance in 2Q’19 were general corporate purposes with €14.9 billion, which was up 31.4% from €11.4 billion in 1Q’19 and up 25.9% from €11.9 billion in 2Q’18. Leveraged loan issuance, including first lien, second lien, and mezzanine financing, increased to €30.9 billion on 58 deals in the second quarter of 2019, an 8.8% increase in volume from €28.4 billion on 55 deals in 1Q’19 but a 39.2% decrease from €50.9 billion on 96 deals in 2Q’18.Over three quarters (77.8%) of deals financed in the second quarter of 2019 were issued for refinancing and/or repayment of debt, up from 40.0% in 1Q’19 and up from 47.3% in 2Q’18.Pricing spreads for institutional loans widened by 6 basis points (bps) q-o-q and by 66 bps y-o-y while spreads for pro rata loans tightened by 11 bps q-o-q but widened by 20 bps y-o-y. Credit quality: As of June 2019, S&P reported the trailing 12-month speculative-grade default rate at 2.3%, an increase from 2.0% in March 2019 and an increase from 1.8% in June 2018.Three bond-related defaults were reported in the second quarter of 2019, all in developed market. Two firms defaulted due to missed interest payment and one due to distressed exchange.According to Standard and Poor’s, in 2Q’19 upgrades exceeded downgrades in developed market Europe (27 upgrades to 25 downgrades), a much better ratio than 13 upgrades to 26 downgrades in 1Q’19 but slightly worse than 31 upgrades to 26 downgrades in 2Q’18.