Duration, decompression and dispersion disconnects grow
Investors’ reassessment of the time they may need to hold on to positions — as well as the limited opportunity for some borrowers to access new capital — are adding to a growing list of factors causing credit market prices to disconnect

Banks and loans to benefit in 2022 as safe havens dwindle
Safe havens and sector pitfalls are among some of the top considerations for portfolio managers this year, as a consensus forms that credit could suffer versus other asset classes

Zais and BNP Paribas strike ESG breakthrough with climate change CSO
The growing theme of environmental, social and governance standards helping to revitalise the market for collateralised synthetic obligations appears to have taken a big step forward, with Zais Group and BNP Paribas partnering on a first-of-its-kind deal that could lay a template for future transactions

It's all relative: IG index drifts wide of 50bp as European CLO triple Bs outperform
US investment grade credit has been an underperformer in the last few weeks with CDX IG trading north of 50 basis points again. But European CLO triple Bs are looking strong while there is a stronger bid for two- to three-year paper in the US

Credit Rendezvous: And breathe...
The unanimous verdict is that credit spreads will be moving wider – they have to. But the difficulty credit fund managers face is predicting when the next sell-off comes and how sharp it will be. In the Q3 instalment of Creditflux’s Credit Rendezvous, the over-riding message from portfolio managers is that there’s little point in taking on too much risk. The report features the views of prominent credit figures including Paul Horvath (Orchard), Himani Trivedi (Nuveen), Ronnie Jaber (Onex), Graham Rainbow (Alcentra) and Michelle Russell-Dowe (Schroders). The report looks at 14 segments of the market including CLOs, direct lending, leveraged loans, distressed debt and credit derivatives.  

It's all relative: CDX HY touches record tights but junior US CLO tranches leak wider
Credit spreads are marching tighter, but someone forgot to tell the CLO market. European and US CDS spreads have moved in step with each other for the most part with investment grade and high yield tightening 4-6% in the last week, whereas CLOs have been losing ground

Climate change pair trade delivers as oil companies' CDS widens
A climate change pair trade proposed by Anthropocene in March has come good with Norwegian oil company Equinor’s CDS outperforming Total, a French oil company

Credit Rendezvous: ready and waiting
In Creditflux's quarterly review of credit, portfolio managers tell us that Inflation is likely to nudge higher but they are optimistic because dispersion will pick up and windows of volatility will emerge, rather than elongated phases of stress 

"IG investors might want to rethink the instrument, but they need not fear rising rates just yet"
In his latest column for Creditflux, Cheyne's Duncan Sankey writes that the sharp rise in 10-year US treasuries could be positive for investment grade investors, but value is in CDS rather than bonds 

Technicals support IG while investors hunt for rising stars
Investment grade credit spreads have been stubbornly tight for the past six-months, but investors see positive technical factors that make lower-rated bonds appealing

It's all relative: CLOs march tighter as macro traders open positive CDS skews
Credit default swaps are back near where they started the year after giving up their early-February gains amid a rise in government bonds. CDS curves steepened over the past month and macro hedging has left indices trading with positive skews. But CLOs paint a calmer picture in which spreads have inched tighter  

It's all relative: CLOs are lagging no more, as Carlyle deal drags market tighter
“CLOs are lagging” has been a much repeated refrain over the last nine months. But Carlyle Group has this week produced a US CLO that has dragged spreads to their tightest point in three years so that, rather than comparing CLOs to pre-covid levels, they should be assessed against early 2018

It's all relative: senior CLO tranches tighten 18% in Europe as CDS indices sit out rally

US looks for stronger open after sell off
US credit is opening slightly stronger on Thursday, after its sharp Wednesday rout, prompted by Federal Reserve messaging, carried over forcefully into Asian and European markets

Credit Rendezvous: heading for homes
Fund managers in structured credit, real assets and distressed are bullish on the prospects for residential housing in 2021. Elsewhere, niche royalty-based strategies are in favour and although a CLO repricing wave is expected, it may not be easy to execute resets. For more, read our 13-page quarterly report on credit. 

Convexity pushes high yield bond basis to the forefront
Compression had become the watchword of the market as Creditflux went to press, providing justification for high yield versus investment grade macro plays, wide-end long positioning and selective tight-end shorts. But the more important driver, say some relative value investors, was convexity

Little room to move in IG’s vice-like grip
The absolute tightness of credit has left investment grade specialists a tough challenge to find value in the coming year, with neither scope for spread improvement nor encouragement to go short

Compression plays out as HY and European CLO double Bs outperform
Investment grade and high yield credit spreads have tightened in sync with each other this week, but CDS and CLOs alike underline that the big theme over the past month has been compression between investment grade and high yield

IG and crossover indices converge while European CLO double Bs rally
iTraxx Crossover is again outperforming Main today with the investment grade index widening 0.11bp to 52.56bp while the crossover index is 2.42bp tighter to 296.99bp. Meanwhile bank research signals that junior CLO tranches could benefit as investors look at covid industries through a different lense 

Credit rally rolls on as indices approach one-month tights
CDS indices are approaching their mid-October tights as reality seeps in of a divided US government and, consequently, little chance of dramatic corporate tax increases. Yesterday, iTraxx Main led the way, tightening 5.3%, followed by CDX NA HY and CDX IG (both 4.5%) and iTraxx Crossover (2.8%)

US credit shakes off early jitters as CDX IG tightens 6.9%
Credit spreads have reversed course yet again to join the rally in equities today. The Dow Jones Industrial Average up 2.5% today and credit is following with investment grade indices leading the way

Credit spreads wind back to February to bring shorts into focus
The credit rally since April has opened up an opportunity to go short credit, say fund managers, with spreads back to where they were in late February