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Daily Archives: 14th May 2019

14th May 2019

We can work it out

MARKET CLOSE:
iTraxx Main

65.7bp, -2.6bp

iTraxx X-Over

283.3bp, -7bp

🇩🇪 10 Yr Bund

-0.07%, unchanged

iBoxx Corp IG

B+135.6bp, +1bp

iBoxx Corp HY

B+442bp, +3bp

🇺🇸 10 Yr US T-Bond

2.42%, +1.5bp

🇬🇧 FTSE 100

6144.25, (+1.26%)
🇩🇪 DAX

11657.69, (+1.33%)
🇺🇸 S&P 500

3036.13, (+0.74%)

Pragmatism returns…

First the storm, then the calm. What happens next depends on the next Trump tweet or the headlines out of China. That’s where and how policy and its response is being aired to the watching nervous global markets.

The markets should know better than respond to every Trump tweet.  He is a dealmaker and it is well-known that he uses gamesmanship for his cause.

However, if one were a corporate treasurer – whether there is a need for funding or wanting to pull the trigger on an opportunistic lift, now’s as good a time as any to go. Credit investors will be happy funding – no problem, and primary is not closed. Just look at that massive Fidelity National deal on Tuesday.

Generally, though, deals will likely see less oversubscription, tightening of pricing versus the initial price talk might be less than of Q1 and performance on the break might not see an automatic tightening. But once we get over the embarrassment of only 10-20bp final price tightening on books 2-3x subscribed and a deal unchanged or wider when free to trade, one should see that it makes sense to get the paper on board. Time to get real.

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