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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