Credit update May 13, 2013

Quite a few eyeballs on the high yield market as it descent below the 5% yield mark has drawn attention like never before. Spreads to risk-free treasuries are still not at the lows, but remember that spreads earlier (low or otherwise) were set against a backdrop of much higher rates. As we have explained before, this makes the asset class very sensitive to treasury rates and for example, the recent march-up in treasury rates may portend a temporary decline in credit price performance. But then again, every step down seems to elicit “buy” interest afresh as the QE system exhorts us to “buy on the dip”.

 

We have seen inflows this week of close to a billion into the sector spread across ETFs and mutual funds.

 

Actives: HPQ, DELL, TPORT, JCP, ANR, WIN, AKS, CZR

 

Spreads:

investment grade +72 bps over swaps (unchanged)

High yield .. $106.75 price, 5.75% yield.

Emerging market +110 bps over swaps

Advertisements

Tagged: , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: