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September 2020

This month, the credit markets saw a record issuance with $164.4 billion of new deals, while spreads on secondary paper widened as volatility dominated risk assets amid a tech sell-off in equities. The chance for spreads to close September tighter for the fifth straight month was averted and we saw spreads in credit trade in wide ranges from 20-55 basis points.

The new issue market put up record numbers and topped September 2019’s record for new supply, closing out the month with $164.4 billion. The economy continued to be challenged as Congress has been unable to agree upon extending the Stimulus Relief Package for the American worker.

Secondary activity saw net client selling of $1.9 billion and the bright spot was financials, as they lead the charge with over $3.4 billion in net client buying. Support from the Fed continues to buoy the market as monetary and fiscal stimulus programs have had a solid impact on the credit backdrop, given confidence to fixed income investors to buy new issue credit.  

Issuance Stats

IG (ex-SSA)
MTD $164.423 billion
YTD $1,542.0 billion

Run Rate

IG Gross (ex-SSA)
Run Rate +67%
2020 $1,542.0 billion
2019 $922.3 billion

Largest Months by Volume

Apr-20 $285.6 billion
Mar-20 $259.2 billion
May-20 $242 billion
May-16 $177 billion
Jan-17 $174 billion
Jun-20 $169 billion
Sep-20 $164.4 billion
May-17 $158.5 billion
Sep-19 $158.1 billion
Sep-13 $147.9 billion

In September, IG Credit spreads were 10-35 basis points wider as volatility came back into the market following a solid spread performance in August that had spreads unchanged to 15 basis points tighter.

As volatility returned to the credit markets, we saw some sectors whiteness some wide trading ranges with strong rated credits trading in 15-25 basis point ranges for the month and lower rated triple B paper trading in 30-55 basis point ranges. Credit has been on a roller coaster ride as spreads traded at the YTD tights in mid-February then as the coronavirus started to impact the market, spreads pushed out to the wides in mid-to-late March and then went on a full rip tighter in April that had spreads 50 to 100 basis points tighter. The tightening we saw from May through August had spreads at, or approaching pre-coronavirus levels and in some cases, were tighter.  

With another record setting new issue calendar, September’s spread widening brought with it net client selling. The CDX Investment Grade Index opened the month at 65.55 and traded in a wide band, out to 71.8 on September 18, and as tight as 52.8 on September 21, closing the month at 59.74.

The Bloomberg Barclays U.S. Agg Avg OAS closed out September at 1.36, well off the tights of the month and 1.26 on September 2, as volatility came back into the market and pushed the index wider; the high was 1.40 on September 25.

See the charts below for more information.  

CDX Investment Grade Index

Bloomberg Barclays U.S. Agg Corporate Avg OAS