Danske Research Team
Danske Bank A/S
Headlines
Another week of strong primary market activity
Modest risk-off mode with widening CDS indices
Focus on Crimea’s referendum on Sunday
Market commentary
This week has been dominated by strong issuance activity in the primary markets and strong investor sentiment as investors hunt for yield in a low-rate environment. The conflict in Ukraine has had limited influence on the positive investor appetite, although we have seen a modest risk-off mode since last week in equity markets and CDS indices. The modest risk-off mode is further influenced by weak US and Chinese growth data. The short-term focus will be on Crimea’s referendum to join Russia this Sunday (16 March), the referendum is expected to be in favour of joining Russia and the big question relates to Russia’s potential reaction and the response from the US and Europe. The US secretary of state, John Kerry, has warned that there could be ‘very serious’ steps if there are no signs of resolution between Russia and Ukraine.
The iTraxx Crossover index has currently increased to 278bp (260bp last week) and the iTraxx Europe investment grade index has widened by 5bp and is currently at 77.5bp, graphically illustrated to the right.
Debt markets are dominated by strong investor demand and as a result we have seen oversubscribed order books and transactions priced with minimal new issue premium this week. The Norwegian government-owned aviation company Avinor (A1/AA-) made its first appearance in the EUR market with a seven-year EUR300m issue at the tightest spread in history for a seven-year corporate transaction. Avinor’s seven-year senior unsecured bonds was priced at mid-swap + 45bp and the bond issue was 5x oversubscribed. We expect strong primary activity to continue, but a change in the macroeconomic scene should affect the extraordinary positive investor sentiment.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
AUD/USD pressures as Fed officials hold firm on rate policy
The Australian Dollar is on the defensive against the US Dollar, as Friday’s Asian session commences. On Thursday, the antipodean clocked losses of 0.21% against its counterpart, driven by Fed officials emphasizing they’re in no rush to ease policy. The AUD/USD trades around 0.6419.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday during the early Asian session. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold price edges higher on risk-off mood hawkish Fed signals
Gold prices advanced late in the North American session on Thursday, underpinned by heightened geopolitical risks involving Iran and Israel. Federal Reserve officials delivered hawkish messages, triggering a jump in US Treasury yields, which boosted the Greenback.
Runes likely to have massive support after BRC-20 and Ordinals frenzy
With all eyes peeled on the halving, Bitcoin is the center of attention in the market. The pioneer cryptocurrency has had three narratives this year already, starting with the spot BTC exchange-traded funds, the recent all-time high of $73,777, and now the halving.
Billowing clouds of apprehension
Thursday marked the fifth consecutive session of decline for US stocks as optimism regarding multiple interest rate cuts by the Federal Reserve waned. The downturn in sentiment can be attributed to robust economic data releases, prompting traders to adjust their expectations for multiple rate cuts this year.