Highlights from the Week in Corporate Credit:
September 16 – 20, 2019

North American credit traded with a mildly positive tone amid an eventful week including drone attacks on the oil sector, dislocations in the funding markets, and a 25bp rate cut in the US. Weekend headlines about the attack on Saudi Aramco oil facilities sent crude prices higher and energy credits tighter on concerns that world oil output may be restricted for an extended period.  Oil prices abated later in the week once Aramco announced it would have facilities back online within a couple of weeks.   In the US, central banks were forced to intervene when cash funding rates spiked above the Fed’s target range.  The move sparked temporary concern that a bank failure may be lurking behind the scenes, but rumours proved unfounded and the spike proved to be largely technical.  On Wednesday the Federal Reserve cut the target rate by 25 basis points, a move which was largely expected, and Fed Chair Powell was careful to temper market expectations of further cuts.  Amid this backdrop treasury yields drifted lower while a slower US new issue market allowed credit spreads to tighten by 2-3 bp.

It was a busy week for the Canadian market with six issuers printing a total of CAD 6.8 billion. Waste Management issued its inaugural deal in the Canadian market, and Scotiabank brought its first bail-in bond. In general, most deals this week performed very well, printing with slight concessions and generating significant demand from investors.