Danske Research Team
Danske Bank A/S
What’s on our mind
- General credit market news
The European credit market remained flat last week, with iTraxx Main stable at 60bp. The iTraxx Crossover index underperformed slightly, being wider some 8bp to 277bp. The stable credit market follows a calmer situation in rates last week. Last week, the bund yield rose 'only' 0.08pp following a historical storm that has left bunds down 4 full figures over the past 14 days, corresponding to an increase in yields of 0.35pp. Currently, the 5Y bund is indicated at 0.41%.
The slight underperformance in the high-yield segment came on the back of weak European retail sales numbers and weak job numbers out of the US.
Last week was also dominated by the UK elections, which saw a surprise absolute majority win by the conservatives and David Cameron. The result was interpreted as a business-friendly outcome, with UK equities and bonds outperforming subsequently.
The continued recovery in the oil price, with the Brent price up to USD65/bl, from USD64/bl at the beginning of last week, is helping energy bonds in Europe and, in particular, in Norway, which is dominated by a broad variety of energy-related issuers. Since the bottom in mid-January, Brent has now risen by some 41%.
Last week’s new issuance activity was relatively modest compared with the significant issuance spree seen over the past couple of months. We expect activity to pick up again though, as issuers seek to access the market before the summer lull. In the Nordic region, we saw prints from Finland’s Kemira and Norway’s Teekay LNG Partners last week.
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