The credit market used most of last week to digest the ECB meeting where the decision to expand the QE programme to include investment grade euro-denominated corporate bonds was particularly in focus.
The initial reaction was very positive but towards the end of last week the reaction abated a bit. The iTraxx Main has tightened 15bp and the iTraxx Crossover 48bp since the ECB meeting.
Several issuers used the positive market sentiment to come to the market during the week. On a global basis the EUR13.25bn deal from Anheuser-Busch and the EUR4.5bn deal from Deutsche Telekom (DE:DTEGn) are worth highlighting whilst in a Nordic context Vasakronan issued NOK650m and both Swedbank and Danske Bank issued EUR100m senior unsecured each in private placements.
In the US a concerned Fed sent a very dovish message to the market by signalling only two hikes this year (down from previously four) citing that 'global economic and financial developments continue to pose risks'
We have closed our trade idea Buy SEB EUR 0.75% 2021 (senior unsecured), as it has tightened and now trades in line with other Swedish banks' senior unsecured bonds. At the day of the closing the ask price indicated 0bp to the EUR Financials senior AA-curve (mid) and 1bp to SEB EUR 2% '21 (mid) for six months longer maturity, compared to 10bp and 8bp, respectively, when we published the trade idea on 25 February. All in all, the ask spread had tightened 21bp based on the closing price as of 15 March.