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MNI Credit Weekly: Spreads Resilient

Spreads Resilient As Equities Retreat From Highs

AnalysisCredit AnalysisHomepageCredit

Executive Summary: Spreads Resilient As Equities Retreat From Highs

  • €IG eked a marginal tightening this week despite a slight softening in equities and rates. We note several significant risk-off equity moves though there was an absence of notable single name sell-offs in credit aside from the typically volatile CPI Property.
  • Spreads tightened by 0.5bp on the week with performance evenly distributed across maturity and rating buckets. Energy and Utils were marginally wider while Fins and Comms outperformed slightly.
  • Primary was decently busy for a two-day issuance window, the EUR 12.2bn in supply coming in as the 12th busiest of the 22 weeks this year. The total cover ratio was the second lowest of the year-to-date while the WAM was the second longest of the year, mainly on the back of the Medtronic 43s and 53s.
  • Macro continues to centre on the higher-for-longer narrative with the idea of back-to-back ECB rate cuts having lost steam with most of the recent rounds of ECB-speak playing down the need to pre-commit to such action and with just ~58bp of cuts priced for the year.
Full piece here:

24.05.31 MNI Credit Weekly.pdf

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Executive Summary: Spreads Resilient As Equities Retreat From Highs

  • €IG eked a marginal tightening this week despite a slight softening in equities and rates. We note several significant risk-off equity moves though there was an absence of notable single name sell-offs in credit aside from the typically volatile CPI Property.
  • Spreads tightened by 0.5bp on the week with performance evenly distributed across maturity and rating buckets. Energy and Utils were marginally wider while Fins and Comms outperformed slightly.
  • Primary was decently busy for a two-day issuance window, the EUR 12.2bn in supply coming in as the 12th busiest of the 22 weeks this year. The total cover ratio was the second lowest of the year-to-date while the WAM was the second longest of the year, mainly on the back of the Medtronic 43s and 53s.
  • Macro continues to centre on the higher-for-longer narrative with the idea of back-to-back ECB rate cuts having lost steam with most of the recent rounds of ECB-speak playing down the need to pre-commit to such action and with just ~58bp of cuts priced for the year.
Full piece here:

24.05.31 MNI Credit Weekly.pdf