Global fixed income focus - May 2016

• Energy and basic materials loan sector spreads widened across every rating category in May, with North American B- energy spreads widening 101bps, the most of the month. The rally in oil prices appears to have kept every energy issuer off the worst performers list this month
• CDS spreads staged a robust rally in the latter half of May, helped by a continued rise in the price of oil. The Markit iTraxx Europe started the month at 73bps, widened to 80bps on May 19th,then recovered to close the month at 72bps. The skew in the index was relatively stable - around 5bps - and marked a departure from the previous month, when single names outperformed indices
• Greek sovereign spreads tightened the most on a percentage basis (-21.1%) in May (Figure 1), with Senegal, the United Kingdom, and Cyprus spreads all tightening more than 10% on the month
• Developed nation corporate bonds had a more subdued month in comparison to the gains made the past two months. The Markit iBoxx USD Liquid High Yield Index continued to eke out gains, returning 0.54% in April
• On June 9th, the US House of Representatives passed Puerto Rico Oversight, Management and Economic Stability Act, or PROMESA, which enables Puerto Rico to restructure its debt, similar to a state. The bill had bipartisan support and was passed by a wide margin of 297-to-127 votes
• Securitised product spreads rallied across the sector to varying degrees in May. US consumer ABS was one of the best performing assets, on the heels of an influx in new issuance that was met with very strong demand

Download full article

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.