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Credit Insights

Corporate Bond Market Normalizes After Record-Breaking Issuance at Beginning of Month

The differing outlook is based on the high degree of uncertainty over potential contagion of slowing economic growth in Asia and Europe spreading to the U.S. economy.

After setting new records at the beginning of September for the greatest amount of new-issue volume brought to market in a single week, activity in the corporate bond market continued to normalize last week. Institutional trading action in the secondary market focused on trading new issues that had been brought to market over the past three weeks as portfolio managers rightsized their positions to capture where they see relative value. As this paper was being shuffled around, credit spreads tightened modestly as demand from global fixed income investors for U.S. dollar-denominated securities remained solid. In the investment grade market, on a week-over-week basis, the Morningstar Corporate Bond Index tightened 1 basis points to +117 and in the high-yield market, the ICE BofAML High-Yield Master II Index tightened 2 basis points to +381.