Daily Archives: 16th April 2019

16th April 2019

Inflows, demand, reduced primary, illiquidity…. squeeze

iTraxx Main

58bp, +0.1bp

iTraxx X-Over

249.1bp, +1.4bp

🇩🇪 10 Yr Bund

0.06%, unchanged

iBoxx Corp IG

B+127.7bp, -1bp

iBoxx Corp HY

B+392.7bp, -3bp

🇺🇸 10 Yr US T-Bond

2.58%, +3bp

🇬🇧 FTSE 100

5993.28, (-0.37%)
🇩🇪 DAX

11073.87, (+0.07%)
🇺🇸 S&P 500

2955.45, (+0.24%)

Credit bagging performance…

It appears as if the Easter holidays are already with us and are acting as limiter on activity after a breakneck start to the year, against the expectations of most. The Dax is up by close on 15%, the S&P a good session’s trading away from a fresh record high, just as euro-denominated IG credit sits on returns of almost 3.5% year to date – with spreads (iBoxx) 45bp tighter.

We happen to believe that there is much life in the primary credit markets (witness demand for Sika Capital deal) right up until Thursday – ahead of the long weekend, and then immediately after from next Tuesday onwards. However, after a better-than-expected €95bn of IG non-financial issuance in the year to date, it could be that we are seeing a slowdown reflecting issuers probably having brought forward deals they might have been looking to do later.

The conditions (declining rates/funding costs/demand) were, after all, too good an opportunity to have passed up. Let’s see.

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