Halister News

(Bloomberg) -- European syndicated new bond sales have totaled EU707.42b so far this year, outpacing the EU695.82b of issuance in the same period of 2015, as investors chase yields down the rating spectrum and along the maturity curve, Bloomberg strategists Simon Ballard and Paul Cohen write.

• Cumulative year-to-date sales, which picked up after a slow start to the year amid China-related concerns, have been driven mainly by a 22% jump in SSA offerings to EU249.3b
  • Corporate and financial issuance has trailed 2015, except at end-2Q when FIG was cumulatively 103.4% of last year’s volume
• Despite increased supply, spreads are maintaining a bias to tighten on low interest rates and ECB’s corporate-debt purchases
  • Latest ECB CSPP data show holdings of EU11.849b, as of July 22, albeit with weekly purchases slowing amid a seasonal decline in liquidity
• Risk assets’ demand-supply dynamics remain robust in spite of global macroeconomic and geopolitical uncertainties, as ultra-loose monetary policy fuels consistent demand for yield and a steady compression of credit spreads
  • EUR IG OAS now ~47bps, vs Feb.’s wides of 102bps; EUR IG total return +5.78% YTD, GBP corporate index +12.29% YTD: BofAML data
  • Lower activity into the typical August lull should further support credit market demand-supply conditions
• NOTE: Data cover new syndicated EUR, USD Reg S (Eurodollar) and GBP-denominated bonds sold in Europe with a maturity of at least 1.5Y and a minimum issue amount of EU100m

• NOTE: Simon Ballard and Paul Cohen are credit strategists who write for Bloomberg. The observations they make are their own and are not intended as investment advice.