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:
Feb 17 – 21, 2020

Global risk markets finished the holiday-shortened week on an uneasy note as renewed fears of the coronavirus took hold combined with softer global economic data. US credit finished about 5 bp wider with industrials and energy underperforming. Apart from the shaky macroeconomic tone, the primary market saw the busiest President’s Day week on record with $37bn of supply. The onslaught of issuance was also a detractor for credit spreads as investors struggled to digest supply. On the rates side, the 10y US Treasury yield fell by 11 bp while Bund yields hit year-to-date lows as a result of the flight to safety.

Canadian credit was relatively unfazed by global developments, ending the week essentially unchanged as managers continue to buy in response to ongoing flows into bond funds. The primary market was active following a slew of corporate earnings with $2.2bn of supply printing across four issuers. Of note, Choice Properties REIT ($CHPUCN) launched a dual-tranche deal, printing a total of CAD 500mm. Both 10y and 30y tranches of the CHPUCN deal were well oversubscribed despite the relatively low all-in yields. Both deals finished the week a couple bp tighter.

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