Danske Research Team
Danske Bank A/S
What's on our mind
- General credit market news
Last week’s bear market did not leave the European credit indices unscathed. The index for European investment grade credits (iTraxx main) traded around 77bp on Monday, compared with around 68bp a week ago. The index for high-yield (HY) credits (iTraxx Crossover) traded around 360bp compared with around 313bp a week earlier.
The general bearish credit market is fuelled by weaker macro numbers from the US and in particular renewed worries about Chinese growth seasoned with further fears of yuan devaluation.
Last week, oil took a heavy beating, with Brent down 10% to USD44/bl. This is negative for several Nordic issuers with exposure to the North Sea exploration and production segment.
The negative sentiment also left the emerging market currencies badly bruised, with the RUB/EUR and RNB/EUR down 9% and 5%, respectively, last week. This puts pressure on export-oriented Nordic industrials, where, in particular, the capital goods and metals and mining sectors are negatively affected.
New issuance activity remains subdued amid the weak markets. In the Nordic region, only SBAB and Lundbergfortagen visited the primary markets accompanied by VW issuing a SEK bond. In the Scandi market, we are still awaiting the first HY deal after the summer lull.
Last week we published Credit Outlook H2 15: ECB keeps the party going but unwanted guests may join.
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