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Highlights from the Week in Corporate Credit:
July 19 – 23, 2021

Risk markets started off the week on the back foot thanks to investor anxiety over the increasing global COVID-19 Delta variant count.  Thankfully, record-breaking earnings reports outweighed any near-term worries, allowing risk to again reach new highs while the Volatility Index (VIX) fell from a high of 25 on Monday to 17 by Friday. In the U.S., 120 of the S&P 500 companies have reported with 88% of earnings ahead of estimates and 84% of revenues ahead of estimates. Investment Grade credit spreads widened 4-7 basis points (bps) early in the week but recovered most of that by Friday to finish the week either side of unchanged.  Primary issuance came in less than forecast due to the soft tone early in the week. Treasury yields fell as low as 1.16% during the Monday selloff before settling into a 1.25%-1.30% range.

Canadian investment grade credit performed similarly to its U.S. and European counterparts, finishing the week +3/-1 bps.  Sectors like Deposit Notes outperformed while Telcos and Energy underperformed. Credit curves also steeped as long-term tenors widened the most. New issuance was quiet with TD’s inaugural Limited Recourse Capital Notes (LRCN) being the sole Canadian transaction of the week. TD printed CAD 1.75 billion (bn) of a 3.6% 80NC5 LRCN which priced with a slight concession and attracted 60 buyers.