Category: Investment Grade Weekly

18 Sep 2020

CAM Investment Grade Weekly Insights

Spreads are slightly tighter on the week.  The Bloomberg Barclays US Corporate Index closed on Thursday September 17 at 128 after closing the week prior at 130.  Spreads have traded in a very narrow range over the course of the last month, with the OAS on the index never closing wider than 131 or tighter than 126 since the week of August 17, with numerous ups and downs within that tight range. Through Thursday, the corporate index has posted a year-to-date total return of +7.43%.  The FOMC was on the tape Wednesday, signaling that rates will remain near zero through 2023, and there was little movement in Treasuries throughout the week.

The high grade primary market was active again, with $42bln in new debt issued, though this was down considerably versus the prior week.  Next week is expected to be slightly less busy, with syndicate supply forecasts weighing in at $30-$35bln.  The pace of issuance should continue to subside as we approach quarter end.

According to data compiled by Wells Fargo, inflows into investment grade credit for the week of September 10-16 were +$4.5bln which brings the year-to-date total to +$196bln.  This was the 23rd consecutive week of inflows into the investment grade corporate bond market.

 

11 Sep 2020

CAM Investment Grade Weekly Insights

Spreads were mixed during the holiday shortened week and look likely to finish close to unchanged or perhaps a touch wider after it is all said and done.  The Bloomberg Barclays US Corporate Index closed on Thursday September 10 at 131 after closing the week prior at 129.  The market has a firmer tone as we got to print on Friday morning, which is a day of remembrance for those that we lost on September 11, 2001.  Through Thursday, the corporate index has posted a year-to-date total return of +7.07% versus +4.74% for the S&P500.  Treasury yields fluctuated throughout the week and are looking to finish modestly lower versus the week prior.  Treasuries were not nearly as volatile as equity markets which saw a continuation of the tech-related whipsaw which developed in the latter half of last week.

To say that the high grade primary market was active this week would be an understatement, especially considering that Monday was a holiday.  Through Thursday 44 investment grade companies sold over $65 billion in new debt according to data compiled by Bloomberg.  This is a remarkably high total over the course of just 3 trading days.  Next week is expected to be busy as well with consensus estimates calling for $40bln in new supply.  It is a good time to be an issuer with attractive borrowing costs and robust demand.

According to data compiled by Wells Fargo, inflows for the week of September 3-9 were +$6.4bln which brings the year-to-date total to +$163bln.  This was the 22nd consecutive week of inflows into the investment grade corporate bond market.

21 Aug 2020

CAM Investment Grade Weekly Insights

Spreads are wider on the week.  The Bloomberg Barclays US Corporate Index closed on Thursday August 20 at 131 after closing the week of August 10-14 at 128.  The market has the feel of a quiet summer Friday as we go to print this morning.  Through Thursday, the corporate index has posted a year-to-date total return of +7.34%.  Treasury yields are lower this week after having trended higher each of the last two.

The high grade primary market was reasonably active again this week, especially for what is typically a seasonally slow time as issuers printed nearly $36bln in new debt.  Of note, the August all-time issuance record has already been broken with nearly $120bln in issuance month-to-date, according to data compiled by Bloomberg.  Consensus estimates are calling for ~$20bln in issuance next week.

According to data compiled by Wells Fargo, inflows for the week of August 13-19 were +$8.0bln which brings the year-to-date total to +$136bln.  This was the 20th consecutive week of inflows into the investment grade corporate bond market.

31 Jul 2020

CAM Investment Grade Weekly Insights

Spreads took a breather this week and may finish the week a touch wider when it is all said and done.  The Bloomberg Barclays US Corporate Index closed on Thursday July 31 at 133 after closing the week of July 20-24 at 131.  Through Thursday, the corporate index has posted a year-to-date total return of +8.35%.  Rates have continued to grind lower over the course of the past two weeks and the 10yr Treasury is flirting with its lowest levels of 2020.

The high grade primary market was more active this week as borrowers brought just over $25bln in new debt to market.  According to data compiled by Bloomberg, $64.4bln in new debt was priced during the month of July which was underwhelming versus consensus estimates of $90-$100bln.  The primary market should continue to pick up in subsequent weeks as companies continue to report earnings, exiting blackout periods.

According to data compiled by Wells Fargo, inflows for the week of July 23-29 were +$10bln which brings the year-to-date total to +$92.9bln.

24 Jul 2020

CAM Investment Grade Weekly Insights

Spreads look to finish the week tighter again as the grind lower continues.  The Bloomberg Barclays US Corporate Index closed on Thursday July 23 at 130 after closing the week of July 13-17 at 136.  The return on the corporate index keeps inching higher with a year-to-date total return of +8.28% through Thursday.  This week saw spreads move tighter throughout as we are now firmly in the midst of earnings season meaning supply has come to a standstill.  Additionally, dealer inventories are near historic lows which has made it a sellers’ market, with offerings few and far between.  Rates have continued to inch lower in recent weeks and the 10yr sits within 5 basis points of its year-to-date lows.

The high grade primary market was extremely quiet this week with just $6.6bln in new supply.  This is typical in the midst of summer and during earnings season but it is fair to say that it was even slower than expected given most dealer projections were pegging supply in the $15-$20bln range.  Issuance should be subdued again next week but could pick up in mid-August if the macro-tone remains friendly to issuers.

According to data compiled by Wells Fargo, inflows for the week of July 16-22 were +$11.1bln which brings the year-to-date total to +$82.7bln.

 

12 Jun 2020

CAM Investment Grade Weekly Insights

Spreads are set to finish the week wider, giving back some of the big move tighter from last week.  The Bloomberg Barclays US Corporate Index closed on Thursday June 11 at 161 after closing the week of June 5 at 146.  The corporate index was a beneficiary of lower Treasuries and the total return for the year through Thursday inched higher to +4.10%.  This week saw spreads move modestly tighter on Monday followed by moves wider on Tuesday and Wednesday followed by a violent move wider on Thursday.  The tone was more positive on Friday with spreads moving tighter, recouping some of the move wider from the prior three days.  Rates moved lower throughout the week to the tune of about 10 basis points versus the week prior which saw a close on the 10yr Treasury of 0.895% vs sub-0.70% as we go to print.

The primary market saw its slowest week since early March with just over $25bln in new corporate bond issuance.  The Fed meeting on Wednesday and market rout on Thursday were the one-two punch that kept issuers at bay.  Supply is expected to pick-up again next week with preliminary expectations calling for $40-$50 billion of supply according to data compiled by Bloomberg.

According to data compiled by Wells Fargo, inflows for the week of June 4-10 were +$13.6bln which brings the year-to-date total to -$-12.7bln.  This extends the 10-week streak of inflows to $89bln+ for investment grade funds.

 

 

 

29 May 2020

CAM Investment Grade Weekly Insights

Spreads moved significantly tighter throughout the week.  The Bloomberg Barclays US Corporate Index closed on Thursday May 28 at 175 after closing the week of May 22 at 185.  The corporate index total return for the year through Thursday was +2.54%.

The primary market was busy again but volume was lower for the second consecutive week.  This week saw over $38bln price in the primary market.    Corporate issuance has now passed the $1 trillion mark for 2020 and it has done so at its fastest pace ever.  New issue concessions have steadily declined in recent weeks and even turned negative for some deals in the latter half of this week.  Strong inflows into the IG markets are the driving factor behind narrowing (and negative) concessions.

According to data compiled by Wells Fargo, inflows for the week of May 21-27 were +$11.5bln which brings the year-to-date total to -$43.7bln.  This extends the 8-week steak of inflows to $55bln for investment grade funds.

 

 

 

22 May 2020

CAM Investment Grade Weekly Insights

Spreads moved significantly tighter throughout the week.  The Bloomberg Barclays US Corporate Index closed on Thursday May 21 at 187 after closing the week of May 15 at 208.  The corporate index total return for the year through Thursday was +2.15%.  The fixed income markets will close early on Friday ahead of the Memorial Day weekend and spreads are modestly wider as we go to print as it looks like the extended rally in credit might finally have an off day.

The primary market was busy again but volume was lower than the week prior.  It could well be that the early market close on Friday was the only thing that kept volumes lower on the week as we saw over $47bln of new debt price through Thursday with no issuers on the calendar for Friday morning.    Corporate issuance is closing in on the $1 trillion mark as nearly $970bln of corporate debt has been priced so far this year which is 90% ahead of 2019’s pace.  We are still finding attractive opportunities in the primary market but certainly fewer today than in the recent past.  According to data compiled by Bloomberg, concessions have trended downward over the last month with issuers averaging just over 5bps this week vs 11bps last week and 22bps the week prior.

According to data compiled by Wells Fargo, inflows for the week of May 14-20 were +$8.5bln which brings the year-to-date total to -$55.2bln.  This extends the 7-week steak of inflows to $43.5bln for investment grade funds.

 

 

15 May 2020

CAM Investment Grade Weekly Insights

Spreads moved tighter throughout the week.  The Bloomberg Barclays US Corporate Index closed the week of May 15 at an OAS of 208 after closing the prior week at 212.  Through Friday, the index total return for the year was +0.72%.

The primary market again remained en fuego as borrowers rushed to stock their coffers with liquidity.  Over $60 billion in new debt was priced this past week according to data compiled by Bloomberg.  So far more than $156 billion has priced during the month of May.  It seems that the Memorial Day Holiday is the only thing that can slow the pace of issuance at this point.

According to data compiled by Wells Fargo, inflows for the week of May 7-13 were +$6.2bln which brings the year-to-date total to -$74.6bln.  This extends the 6-week steak of inflows to $35bln for investment grade funds.

08 May 2020

CAM Investment Grade Weekly Insights

Spreads drifted modestly wider throughout the week.  The Bloomberg Barclays US Corporate Index closed the week of May 8 at an OAS of 212 after closing the prior week at 206. Still, we have come a long way from the market wide on the index, which was an OAS of 373 on March 23.  Through Friday, the index total return for the year was nearly unchanged at +0.03%.

The primary market continues to be at the forefront as the historic deluge of issuance continues to break records on what seems like a daily basis.   $93.2 billion in new debt was priced this week according to data compiled by Bloomberg.  This vaulted the week into one of the top-5 busiest ever for volume.  There is no end in sight to issuance as borrowing costs remain low, investor demand is robust and companies are eager to amend, extend, refinance and bolster liquidity amid economic uncertainty.

According to data compiled by Wells Fargo, inflows for the week of April 30-May 6 were +$6bln which brings the year-to-date total to -$80.8bln.