Over the past week, the index for European investment grade credits (iTraxx main) traded in the 70-75bp range and ended the week around 73bp. The index for European high-yield credits (iTraxx Crossover) traded in the range 323-335bp over the past week compared with an intraweek peak of nearly 380bp a few weeks ago.
Equity volatility was again high last week. Equity volatility, as measured by VIX, has been >20% over the past few weeks, which is likely to be one explanation (maybe the most important one) of the recent weeks' volatile European credit markets.
Issuance in the Scandi investment grade credit market was high last week and we saw prints from Volvo, Saab, Scania, Sato, Sparebanken Vest and Assa Abloy.
Last week, we again saw widening spreads in the Scandi high yield market (around +10bp). Despite the widening trend, we saw the Scandi high yield new issue markets open up after the summer over the week and saw high yield transactions from Lock (Lindorff), Sagax and Np3 Fastigheter AB. We expect more issuance activity over the next month.
Following the declining oil prices over the past year, the offshore support vessel (OSV) sector has sailed into an increasingly rougher sea. The offshore support vessel market is set for a wave of restructurings (with negative implications for bondholders) following liquidity and solvency challenges for some of the OSV players. Consolidation may follow. See our conclusions overleaf.
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