Corporate credit spreads widen on Treasury volatility, equity sell-off
By Matt Tracy
Aug 2 (Reuters) -Corporate credit spreads widened and primary bond issuance came to a halt on Friday as equity markets sold off for the second day in a row, following data that raises expectations of a hard landing for the U.S. economy and more interest rate cuts in coming months.
The credit spreads or premium over Treasuries paid by corporate borrowers on investment-grade rated bonds were about 5-7 basis point wider on average Friday from Thursday levels. Junk-rated bond prices were also quoting about 5-10 basis points lower, investors said.
"It is not pretty out there at the moment with credit spreads on newly issued bonds widening out by as much as 5-10 basis points from where they were issued," said Scott Schulte, head of U.S. investment-grade syndicate desk at Barclays Capital.
The weaker ISM data on Thursday followed by the employment numbers a day after put fuel on the fire that the Fed may actually be behind the curve in their ability to successfully achieve a soft landing, he added.
U.S. 10-year Treasury yields US10YT=RR dropped as low as 3.79% on Friday, the lowest since December, and were last down 15.9 bps at 3.818%.
The drop came as Friday's data showed that nonfarm payrolls increased by 114,000 jobs last month after rising by a downwardly revised 179,000 in June. Economists polled by Reuters had forecast payrolls advancing by 175,000 jobs after gaining 206,000 in the previous month.
"We have been in an extremely low volatility period for quite some time now," said Connor Fitzgerald, fixed income portfolio manager at Wellington Management.
"Now I think there's some data that says...things are finally slowing. So if you start pricing even a small percentage chance of a recession, I think investment grade credit spreads will be very sensitive to that," he said.
The spike in market volatility is already increasing funding costs for investment-grade rated companies. The seven new deals that priced on Thursday paid an average 5.8 basis points more in new issue premium. This is higher than the average 2.72 basis points that companies paid to issue new bonds in all of July, according to data from Informa Global Markets.
Persistent volatility in Treasuries could slow the issuance momentum seen in corporate bond markets all through this year. Some $80 billion of new investment-grade bonds are expected to be issued in August, including the $8.8 billion of bonds issued on Thursday, according to IGM.
Reporting by Matt Tracy; Editing by Shankar Ramakrishnan and Toby Chopra
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
