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Daily Archives: 18th September 2018

18th September 2018

One hand giveth…

iTraxx Main

59.5bp, -0.8bp

iTraxx X-Over

279.8bp, -2bp

🇩🇪 10 Yr Bund

0.48%, +2bp

iBoxx Corp IG

B+131.5bp, -1bp

iBoxx Corp HY

B+383bp, -3bp

🇺🇸 10 Yr US T-Bond

3.04%, +5bp

🇬🇧 FTSE 100

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🇩🇪 DAX

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🇺🇸 S&P 500

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The other taketh away…

Deals galore littered the primary markets in one of the heaviest sessions for a while – most likely this year so far in terms of the number of issuers. There was SSA issuance, covered bonds, IG and HY corporates, senior and subordinated financials and in dollars, euros and sterling currencies. So we worked through a busy session. IG non-financial deal flow, though, was limited to Vinci and DP World. The drought goes on here. The deluge of deals elsewhere was probably a useful distraction, but we do need a material pick-up in non-financial deals to satiate investor needs.

The low single-A rated French construction giant is a relatively infrequent borrower, but investors in the largest sector of the corporate bond market were left with slim pickings otherwise, and as if to highlight the desperate nature of the limited supply in IG corporates, the book for the Vinci dual-tranche deal exceeded €7bn. It was a good deal for Vinci though, after all they managed to reduce final pricing by up 20-22bp.

We are fast closing in on the final few sessions of the month and we have a Fed meeting to come which will likely close funding windows for a session or so. Add into that the “ECB QE purchase programme is reduced further from October by 50%, so let’s get a deal away before that occurs” marketing ploy, we had ought to see a more material pick-up in the non-financial supply dynamics. We think.

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