Brexit was probably the single biggest boost to IG new issue financing conditions we have seen this year, it has created a broad consensus among issuers that they have a highly attractive - albeit potentially short-lived - chance to fund at cycle low yields.

Jonny Fine

Categorized in : Technology

When polling data starts to come out after the conventions and through the summer weeks, that will potentially diminish risk taking in the market place - likely as we move into later September, that's why we will see robust issuance in the next two to three weeks, as many issuers want to avoid being in the midst of a potentially volatile September or October.

It's a good sign for all yankee FIG borrowers, it shows there is a willingness for the US market to finance European TLAC.

People will want to have a look at the US market, we'll see others, whether in TLAC form or just normal senior debt.

People feel like the valuation move has happened and now there is an appropriate concession and people are willing to commit capital.

Sectors that have seen a lot of supply are seeing some spread pressure, but it isn't as extreme as we saw in July and early August when deals were coming with large new issue concessions but were not tightening up in secondary, as we play this forward, and we start to see more supply, things may start to feel a bit heavier.

The deals (last) week have been digested well - almost exclusively - with good subscription levels and very good migration from talk to launch, there is still a market preference for bigger, more liquid benchmark deals. More off-the-run deals are tougher, but in July and August they just weren't getting done at all.

The real risk to the market over the course of a busy May for new issues is extreme volatility in Treasuries, we have gone from new-issue concessions of zero to 5bp in March to a weaker environment where NICs are 10bp-15bp. In the same period credit spreads have widened a little and Treasuries have increased a lot, so all-in costs of debt issuance have deteriorated.

There have been times when the concessions that various credits in different sectors paid have been uniform, but this is not one of those environments, it's more critical than at any other time for syndicate managers to really understand the difference between individual credits and sectors and how they are likely to be accepted by the bond market versus others.