Commentary

Our insights into Canadian and global credit markets are key to our investment process.
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OUR LATEST HIGHLIGHT IN CORPORATE CREDIT

Highlights from the Week in Corporate Credit:
November 16-20, 2020

Investor sentiment oscillated between encouraging vaccine news and rising global case counts, with most risk assets finishing the week slightly better. US credit spreads were about 2 to 5 bp tighter, led by REITs and energy. November continues to be a busy month for issuance with over $40 billion priced last week. Credit markets were given pause on Friday after US Treasury Secretary Mnuchin requested that the Fed return any unused funds underwriting various market support schemes, including the corporate bond purchase program, by December 31st. While these programs were instrumental in restoring investor confidence in April-May, the reality is they have barely been utilized while sentiment continues to improve. Spreads were only slightly softer on Friday. With US Thanksgiving on Thursday, expect this week to be quiet with most North American trading occurring Monday and Tuesday.

Canadian credit remains well bid as vaccine developments combined with encouraging earnings and a benign primary market allowed spreads to tighten generally by 2-5 bp. Similar to the US performance, energy and REIT sectors outperformed. Equitable Bank was the sole issuer of the week, printing 250mm CAD of a 5y at G+145. The deal was over 3 times oversubscribed and finished the day a couple bp better despite a soft day in equities.

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