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Daily Archives: 10th September 2019

10th September 2019

Credit takes a much-needed breather

iTraxx Main

49.4bp, +1.5bp

iTraxx X-Over

246.5bp, +7.5bp

🇩🇪 10 Yr Bund

-0.56%, +2bp

iBoxx Corp IG

B+124bp, +1bp

iBoxx Corp HY

B+415bp, unchanged

🇺🇸 10 Yr US T-Bond

1.69%, +7bp

🇬🇧 FTSE 100

6026.94, (-1.27%)
🇩🇪 DAX

12591.68, (-0.54%)
🇺🇸 S&P 500

3349.16, (+0.22%)

Primary market respite appreciated…

Finally some respite from the September daily deluge of IG non-financial corporate bond deals. And it probably helped stave off a deeper bout of indigestion after having seen €26bn printed in this month’s seven trading sessions. There were deals but nothing like the massive volumes seen since we returned after the summer. We don’t think that the market has run out of steam and can expect a resumption in issuance at likely heavy levels once we are through Thursday’s ECB meeting.

It feels rather dull when primary slows, but it’s a necessary requirement if we’re going to greet high levels of deals without seeing a material widening in secondary and/or lower subscription levels, followed by good performance when issues are free to trade. After all, demand and performance combine to promotes confidence.

Even if the majority of September’s deals are wider in secondary, we seem to have it just right at the moment. We took a relative breather on Tuesday but we know that there is still plenty of sidelined cash waiting to get invested in this market. The ECB will be the catalyst, most likely, for the next leg of the issuance phase.

It might just provide the tonic for secondary spreads to tighten as well – because they haven’t moved much this month. Although that’s a positive given the welter of primary deals, we’re anticipating more than a grind come next week if the central bank restarts corporate bond purchases as part of any QE.

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