Highlights from the Week in Corporate Credit:
June 17 – June 21, 2019

Global risk assets rallied sharply this week on optimism over US-China relations and dovish commentary from the ECB and the Fed. The Fed’s interest rate decision on Wednesday took center stage, keeping rates unchanged while signaling that lower rates could come as soon as next month.  Investors took reassurance that central banks will continue to support global markets causing equities to reach all time highs and credit to tighten substantially. US credit spreads tightened by over 10 basis points following the Fed announcement, led by higher beta sectors like autos and industrials. The primary market proved quiet as issuers are content to wait for lower yields.  Just under $10 billion of new bonds priced in the US, well below expectations.

Canadian credit lagged the rally, tightening by 5 basis points on average. The energy sector was the top performer, rallying by up to 10 bp due to the sharp rally in oil prices as well as the approval the TMX pipeline. The primary market was steady with approximately $4 billion of supply from five issuers. TD Bank and RBC printed a combined total of $3 billion, with both deals performing well on the break.