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MNI Credit Weekly: Reverse Yankee Came to Town

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Executive Summary: Impressive Digestion of Heavy Supply. Reverse Yankees Set to Keep Coming

  • IG cash spreads little changed with financials outperforming corporates. An impressive feat in a big primary week.
  • Primary had its busiest week of the year yet NICs remain tight by historical standards. €10bn out of €30bn supply came from reverse yankees with the divergence of rate paths starting to have a knock-on effect.
  • As we reach the tail end of earnings season, impact was again limited this week.
  • M&A remains the main source of idiosyncratic risk from here. Once again “events of default” clauses were topical, this time TenneT bonds seeing a drop of up to 10 points with doubts over their asset sale triggering a pricing-out of that premium.
  • Real Estate spreads continue to perform with asset valuations stabilising in the eyes of the market. Funding markets appear to be thawing which is supporting sentiment.

24.05.17 MNI Credit Weekly v2.pdf

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Executive Summary: Impressive Digestion of Heavy Supply. Reverse Yankees Set to Keep Coming

  • IG cash spreads little changed with financials outperforming corporates. An impressive feat in a big primary week.
  • Primary had its busiest week of the year yet NICs remain tight by historical standards. €10bn out of €30bn supply came from reverse yankees with the divergence of rate paths starting to have a knock-on effect.
  • As we reach the tail end of earnings season, impact was again limited this week.
  • M&A remains the main source of idiosyncratic risk from here. Once again “events of default” clauses were topical, this time TenneT bonds seeing a drop of up to 10 points with doubts over their asset sale triggering a pricing-out of that premium.
  • Real Estate spreads continue to perform with asset valuations stabilising in the eyes of the market. Funding markets appear to be thawing which is supporting sentiment.

24.05.17 MNI Credit Weekly v2.pdf