During last week's trading, European credit indices widened, albeit at a fairly subdued pace. The index for European investment grade credits (iTraxx main) ended up trading at around 65bp on Friday, compared with around 63bp at the end of the previous week. The index for high-yield credits (iTraxx Crossover) traded around 300bp compared with around 286bp a week earlier. It is likely that the widening arose on expectations of a large amount of forthcoming new issuance given that much was postponed over the summer as a result of the Greek crisis. Worries about growth in China most likely also had an impact on the credit market last week.
Labour market data published in the US on Friday afternoon showed an increase of 215,000 in the number of employed persons in July, which was slightly lower than the expected figure of 223,000. The unemployment rate was unchanged from June at 5.3%. The data did not change base-case expectations for a Fed rate hike in September.
The summer lull is not yet over and new issuance from Nordic corporates has been fairly muted over the past week, with only a few issuers coming to the market. We expect liquidity to remain low as investors await the upcoming wave of new issuance, beginning at the end of the holiday season.
Spreads in the illiquid Nordic high-yield cash market have widened over the summer. Since 30 June (the date of our last Weekly Credit Update publication), our Nordic High Yield index has widened by around 25bp.
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