Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CCC's across both regions led the moves in yesterday's cash sell-off ($ +18bps, € +21bps) & in $'s case adds to YTD widening of +94bps. We've seen a relatively consensus CCC compression trade from analyst over the last months - most highlighting spreads vs. historical ranges as support for correction. Little signs of that playing out - widening yesterday even in the face of strong rates rally yesterday.
Weakness in the bottom of the rating ladder comes despites index average maturities that are at their lowest levels in over 2 decades. For $CCC's that's 4.3yrs & €CCC its 3.3. Similar read through on pull-to-par opp's with avg' price of $83 & €77 across the two (though index is heavily left/neg. skewed in distribution of bond prices). Fundamentals have weakened but not too the extent markets seem to be pricing - ICR's were flat to Q323 but at low levels (bbg reported below) but our calc's on the indices do point to substantial fall in median ICR's this year - In particular €CCC's - more to come on this from us. Leverage (net debt to EBITDA) has remained relative flat across both.
Yesterday's moves seemed to have been driven by TMT sector - Lumen technologies (Caa3 Neg, CCC-) was was downgraded late on Tuesday's session by S&P to CC Neg. from CCC+ & Moody's followed yesterday with a note that the transaction support agreement company entered with creditors would be viewed (if offers completed) as distressed exchange (form of default). We don't see any clear sector contributor to €CCC's move yest.
For now investor sentiment - not fundamentals - may be the missing piece. Analyst have voiced this concern and pointed to holding limits & scepticism to take on firm-specific risk as drivers.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.