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David Everson, Head of Trading, Fixed Income EMEA, Liquidnet, said: “After a week spent mainly focused on macroeconomic events we saw a surge in activity on Friday, suggesting traders had digested the rates, jobs and inflation data and were now on the front foot.
“Today the spotlight continues to be on the real estate sector with yet another Swedish landlord, FastPartner AB, cut to junk – perhaps signalling further future pain across the rest of Europe. As high rates and persistent inflation remain in control, we can expect bond market investors to be wary of heavily indebted property firms across the continent in the face of strong headwinds that show no sign of subsiding.
“More broadly however, credit markets – particularly primary markets – paint a rosier picture. We expect the first half of the week to be dominated with primary issuance with the US holiday doing nothing to slow a healthy pipeline. Already this morning, we have seen activity with new issues from Portuguese utilities business, Energias de Portugal’s in its 5y green bond, as well as issuance from Dutch financial services business Achmea and Swedish retail bank, SBAB Bank. These new issues demonstrate strong appetite to raise debt despite the prevailing economic conditions – in the minds of businesses, now is as good a time as any to raise when high rates will likely be locked in for some time.”
