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Daily Archives: 16th July 2018

16th July 2018

The numbers don’t lie

MARKET CLOSE:
iTraxx Main

63.5bp, -1.5bp

iTraxx X-Over

288.4bp, -3.6bp

🇩🇪 10 Yr Bund

0.30%, +2bp

iBoxx Corp IG

B+129.1bp, -1bp

iBoxx Corp HY

B+388bp, -4bp

🇺🇸 10 Yr US T-Bond

2.86%, +3bp

🇬🇧 FTSE 100

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🇩🇪 DAX

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🇺🇸 S&P 500

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Holidays are coming

€3.8bn, €2bn and €8bn versus €13bn, €5bn and €2.7bn. That’s IG non-financial, HY and senior financial issuance, respectively, in July so far – against the full month total for the same month in 2017. The numbers don’t hide anything. In fact, they make for a fairly depressing monthly read. They’re important because the market doesn’t really function without a steady, decent level of deals.

The IG deal flow is the most important as this sector makes up some 60% of the total issuance in most years. The month has delivered just €3bn in IG non-financial issuance, but the low level of flow might not surprise anyone. It ties in with the relative dearth of issuance that we have seen from this category all year, with just €121bn of issuance to date versus €163bn for the first seven months of 2017.

There’s a backed-up pipeline, and we think the window is open. Syndicates must be chomping at the bit to clip some pre-holiday fees, and convince borrowers to get deals on the screens ahead of the summer break which will duly arrive once this week ends. Mind, given that deal pipeline, we would not be surprised if several borrowers even try and chance their arm next week, market conditions permitting.

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