Category Archives for "Corporate Bond Issuance"
MARKET CLOSE: | ||
iTraxx Main
51.6bp, +1.4bp |
iTraxx X-Over
233.3bp, +6bp |
10 Yr Bund
0.32%, unchanged |
iBoxx Corp IG
B+96.3bp, +1bp |
iBoxx Corp HY
B+261bp, +6bp |
10 Yr US T-Bond
2.32%, unchanged |
FTSE 100 , | DAX , | S&P 500 , |
There was no midweek lull in the corporate bond market. The credit market was not for taking a break following a couple of days this week of decent primary activity. We had another bunch of deals keeping investors occupied and feeling a little relieved, as cash balances which need to get absorbed before year-end are doing just that. We might just be full-steam ahead into the Thanksgiving break and €2bn or (much) more of non-financial issuance per day at the moment is getting done.
Some will be advised and/or tempted to wait a while, because conditions will remain just as accommodating in Q1 as they are now. It’s just that there will be a gamut of borrowers to contend with, then all looking to get their funding away early once the new year kicks off – so get it in early. Anyway, we weren’t devoid of issuance as the likes of BASF, Union Fenosa and UPS in non-financials amongst others pitted their wares.
MARKET CLOSE: | ||
iTraxx Main
50.2bp, +0.8bp |
iTraxx X-Over
227.3bp, +3.8bp |
10 Yr Bund
0.33%, -1bp |
iBoxx Corp IG
B+95.3bp, -0.1bp |
iBoxx Corp HY
B+252.2bp, -0.5bp |
10 Yr US T-Bond
2.31%, -1bp |
FTSE 100 , | DAX , | S&P 500 , |
The markets have had a bullish disposition about them for the best part of three months. Record closes again in the US overnight and a solid rally in Asian stocks, with commodities heading higher helped by that shake-out on the Saudi domestic front along with rising tensions with Iran (oil at 2-year highs) gave us every reason to trade through a rather mixed and eventually weaker session.
A very positive European open was soon faded, with equity indices closing out up to 0.7% lower. It is certainly a case of ‘baby steps’ as far as European equities are concerned, as they make any gains with a more cautious stance versus their global peer groups. And that’s fine, it’s perfectly natural to trade this way and we are hoping that there are no major event-risk driven lurches lower that would ultimately impact the corporate bond markets.
MARKET CLOSE: | ||
iTraxx Main
49.4bp, unchanged |
iTraxx X-Over
223.5bp, unchanged |
10 Yr Bund
0.34%, -3bp |
iBoxx Corp IG
B+95.5bp, unchanged |
iBoxx Corp HY
B+254.8bp, unchanged |
10 Yr US T-Bond
2.32%, -2bp |
FTSE 100 , | DAX , | S&P 500 , |
Such has been the demand for higher yielding credit risk that the outperformance of this part of the credit market has seen a quite remarkable compression between high yield and investment grade valuations. For instance, the difference between high yield and IG spreads is now at a record tight (157bp) with 15bp of that coming in the last month and 110bp of it this year, as measured by the Markit iBoxx cash index (see chart).
The bigger the risk associated with a structure, the greater the performance of it and therefore the larger the compression.The AT1/CoCo market has been on fire. Of course, when we get to these levels, some are thinking/expecting a pullback. Fortunately, the excess liquidity in the system will likely prevent that from happening, given that the accommodative policy stance is going to unwind only slowly.
MARKET CLOSE: | ||
iTraxx Main
49.4bp, -0.4bp |
iTraxx X-Over
223.3bp, -2.2bp |
10 Yr Bund
0.36%, -1bp |
iBoxx Corp IG
B+95.4bp, -0.4bp |
iBoxx Corp HY
B+252.2bp, -2bp |
10 Yr US T-Bond
2.33%, -2bp |
FTSE 100 , | DAX , | S&P 500 , |
US hiring might have come in lower than expectations (261k actual vs 340k expected), but it was a big ‘corrective’ number and the picture remains promising as the economic outlook brightens. We have a firming recovery, the US unemployment rate dropped to its lowest rate for over 17 years to 4.1% – while wage growth also declined (to 2.4% year on year from 2.8% the previous month).
That’s all good news for investors! We think that there ought to be a real zest about the markets because the trajectory of an economy blowing not too hot or too cold is just about perfect at this stage of the economic recovery, along with a drawn-out rate normalisation process.
MARKET CLOSE: | ||
iTraxx Main
49.8bp, unchanged |
iTraxx X-Over
225.2bp, +1.5bp |
10 Yr Bund
0.37%, unchanged |
iBoxx Corp IG
B+95.8bp, unchanged |
iBoxx Corp HY
B+256bp, -1.5bp |
10 Yr US T-Bond
2.35%, -3bp |
FTSE 100 , | DAX , | S&P 500 , |
The best we could say about the market right now is that it embraces a reflective mood – thinking about the FOMC just gone, the earnings season, the next catalyst to push us higher, the next Fed chairman, Trump’s tax reforms and more immediately, today’s non-farm payrolls.
At least we had some better activity across the primary market after what seems like an age with several session of little or no supply – or nothing to inspire anyway. Eurozone equities gave a little of the previous day’s gains back, rate markets were still treading water and credit was unchanged to better bid for choice, where the squeeze in spreads is taking us deeper into record territory. That systemic event risk – likely the only thing that can derail the markets – delivering a knockout blow to investors who are just as long as they can be, is seemingly as far away as ever.