Category Archives for "Corporate Bond Issuance"

31st October 2017

We can never get enough

MARKET CLOSE:
iTraxx Main

50.0bp, -0.6bp

iTraxx X-Over

225.2bp, -3bp

10 Yr Bund

0.37%, unchanged

iBoxx Corp IG

B+97.7bp, -1.5bp

iBoxx Corp HY

B+259.2bp, -2.5bp

10 Yr US T-Bond

2.37%, unchanged

FTSE 100

,
DAX

,
S&P 500

,

And we can go on…

IG credit for the year to date has returned a superlative 2.8% with returns accelerating over the past two months as rate markets blink and credit spreads tighten into a brightening and anticipatory macro environment. The hunt for yield, buying the kind of risk we think is going to be ‘just fine’ into the financial markets recovery – and which allows us to take advantage of the cheap deals on offer – has made sure that the contingent convertible market has been the year’s most successful area of the corporate bond market. CoCo index returns are at 17% year to date and many will have made 20% or more on their holdings, so far. High yield markets are up 6.6% in the year to end of October. We’re willing the year to end now! And don’t forget, spreads are in record territory for almost all corporate markets and just 5bp away (at B+99bp) for the IG market.

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29th October 2017

Show me the money

MARKET CLOSE:
iTraxx Main

51.4bp, -1.4bp

iTraxx X-Over

232.6bp, -4.5bp

10 Yr Bund

0.39%, -4bp

iBoxx Corp IG

B+100.7bp, -1bp

iBoxx Corp HY

B+264.5bp, +1bp

10 Yr US T-Bond

2.42%, -4bp

FTSE 100

,
DAX

,
S&P 500

,

Powering on…

There are just two sessions to go before we close out a super October for the higher-yielding end of the corporate bond market. The Markit iBoxx HY cash index has tightened by 18bp, the CoCo index by 49bp and even the non-financial hybrid index (already extremely rich) is 24bp tighter in the month so far. They’re all at record tight levels for the respective indices.

The better economic backdrop is the driver as it has helped sustain equities at – or even pushed them to setting – record levels. That confidence has filtered through to other risk assets and especially ones more closely correlated with equities. And all that even as the tightening cycle is underway, but because it is so much in its infancy, the credit markets will continue to trade as the ‘go to’ product for yield hungry investors. Monthly and year-to-date excellent total return performance will only serve to suck in more funds to an asset class where, in 2018, ought in no way deliver the kind of performance it has in a stunning 2017.

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3rd January 2016

High Yield Corporate Bond Issuance

Data provided by Dealogic & Credit Market Daily

The bar graphs below illustrate the trend in the growth and trends in corporate bond issuance in the euro-denominated bond market.

i) HY Corporate Bond Issuance Since 2003

We might have had zero issuance in high yield in December and just €1.8bn in November, but we still managed €62bn for the full year in 2018. Coming home on the heels of that record supply in 2017 of €75bn, the year was a good one nevertheless. As we headed into 2019, our view was that we would see just €45bn of deals in the high yield market. However, we are already forced to revise that target level to €60bn (see below).


MiFID II is HERE


 

ii) Monthly HY Corporate Bond Issuance

The high yield primary market has flattered to deceive this year, but we have started to see greater traction through July after €6.34bn of issuance. We still are awaiting a much more aggressive follow-through in spread tightening even where we are in the IG market. That might spur more borrowers into the market where funding levels are nowhere near the costs of a couple of years ago.

For the year to date, we are up at a little over €36.4bn and although it is difficult to judge where we might end up for the full-year, we would think somewhere around the €60bn mark is still possible.

For fully searchable individual HY deal data, click here.


 

More Charts: Investment Grade Issuance | Senior Financials Issuance

3rd January 2016

Investment Grade Corporate Bond Issuance

Data provided by Dealogic & CreditMarketDaily.com

The bar graphs below illustrate the trend in the growth and trends in issuance in the euro-denominated corporate bond market.

i) Investment Grade Corporate Issuance Since 2003

The financial crisis has ultimately been seen to have helped promote the corporate bond market as a major financial asset class. Zero policy rates and subsequent low bond yields have seen funds shift into the corporate bond market as investors search for ‘safe’ higher-yielding assets. Corporate bonds have been the chief beneficiary and the huge disintermediation in funding for the corporate sector has enabled the euro-denominated corporate bond market to grow in size from just Eur700bn in 2007 to over Eur2trn now.


MiFID II is HERE


 

IG Deals

Go

IG Fund Ratings

Go

IG Spreads

Go

 


 

ii)  Monthly Investment Grade Corporate Issuance

 

Need to view the chart and analysis for monthly IG Corp issuance? This bond research data is only available to creditmarketdaily.com’s subscription members.

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iii) US Corporate Borrowers as a % of Total Euro IG Issuance

A big theme in 2015-16 was the amount US-domiciled corporates funded in the euro-denominated debt markets. As shown in the chart above, it was a record 26% of the total volume in 2015 and 22% in 2016. Low rates everywhere, but lower in Europe along with low spreads made it attractive for US corporates to borrow in euros (even when swapped back to dollars).

That dropped to 16% in 2017, and that is close to the long-term average. For 2018, we dropped back to 12% of US domiciled borrowers accessing the debt capital markets here. For the first half of 2019, the figure stands at a stunning 33% of the market (helped by Medtronic’s €11.5bn, 11-tranche haul).


 

More Charts: High Yield Issuance | Senior Financials Issuance

31st December 2015

Senior Financials Corporate Bond Issuance

Data provided by Dealogic

The bar graphs below illustrate the trend in the growth and trends in issuance in the euro-denominated corporate bond market.

i) Senior Financials Issuance Since 2003

The all singing, all dancing days of senior issuance pre-financial crisis – are over. Admittedly, back then a fair portion of the supply was front-end in terms of maturity and league table motivated, but we have seen a material decline in senior issuance levels. The banking sector, quite simply, doesn’t need the money.

The difficult macro outlook had made banks more wary of lending but conditions and the outlook are less strained now. Nevertheless, we think we will only see issuance at around the average level established over the past few years, while senior non-proffered deals – as TLAC considerations become firmly entrenched – will be main senior funding structure now on.


MiFID II is HERE


ii) Senior Financials Monthly Supply

 

July’s €9.6bn of senior bank deals represented a slowdown from the June offerings (€12.6bn) but we prefer to look at the year as a whole. The total deal flow to the end of July came in at €107bn and is just €23bn shy of 2018’s full-year total.

August has already seen BofA kick off with a transaction in the opening session and the omens remain good for a full-year somewhere in the region of €170bn.

 

More Charts: Investment Grade Issuance | High Yield Issuance