The credit market exhibited a fair amount of stability last week in absence of any major news. Overall the Itraxx Main remained unchanged and the Crossover tightened 4bp.
A new record low for EUR/USD was hit during the week and the two currencies are edging very close to parity. The relative weakness of the EUR bodes well for European and Nordic corporate, as strengthening exports should give an additional boost on top of the fountain of liquidity provided by the ECB.
ECB started its EUR60bn a month asset purchase programme last Monday but it does not include corporate bonds for now. Still, we continue to think that portfolio rebalancing effects will create a solid foundation for tightening spreads in the corporate debt space in the short to medium term.
Last week also underlined that the oil price has not bottomed out just yet. Following a report by the IEA (hinting at a fragile recovery in the oil price) WTI tumbled to a six-year low, which could entail further spread widening for bonds in the Nordic E&P sector.
Swedish utility Vattenfall issued a dual currency corporate hybrid last Thursday. The transaction represents the first ever combined EUR and SEK offering of subordinated notes and also marks Vattenfalls first return to the public market since 2009.
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