Global credit markets rallied into the last trading days of the year as constructive trade rhetoric overshadowed the Trump impeachment proceedings. US credit tightened by 5 bp on thin liquidity, breaking through the tightest index levels of 2019. Across the pond, European credit underperformed slightly after Boris Johnson proposed a legal change that would increase the chances of a non-deal Brexit. The 10-year Treasury yield finished the week essentially unchanged while the 2s5s curve steepened by 5 bp as a result of the risk-on tone. The primary market was shut until 2020 with around $100bn expected in January.
The Canadian credit market was anything but quiet with CAD 2.85bn of issuance across four issuers while secondary credit spreads tightened by 3-5 bp. Royal Bank and National Bank brought the bulk of the issuance with $2.25bn in the 5-year space. The other issuers came from REITs including Crombie, issuing $150mm of a 7.5yr and SmartCentres, issuing $450mm of a 10yr. The Crombie REIT was the outperformer, tightening by 13 bp due a combination of a strong buyers list and small issue size.