Market Commentary
Despite continued Emerging-Market wobbles, the credit markets have been rather stable during the past week. Looking back at February, corporate senior issuance volume comfortably surpassed volumes in February last year. The market backdrop remains very supportive for corporate credit, presenting corporates across the credit rating spectrum with very good new issue opportunities. In the absence of negative headlines and a (albeit) fragile European recovery, the compression of credit spreads for higher beta (more volatile) credits is in full force and investors continue to scramble for yield. New issue activity has been modest over the past few weeks (typical during reporting season) but still higher than last year and those who did enter into the primary market benefited from strong investor attention across the credit spectrum. Given the strong demand for credit in general, order books were well oversubscribed and all transactions priced with minimal new issue premiums or even flat to secondaries. A good example of the overwhelming demand for high quality Nordic issuers was the EUR500m 5Y benchmark issue for TeliaSonera (rated A3/A-) which attracted an order book of EUR2bn from more than 70 investors and offered investors a mere 6bp of new issue premium.
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