Fixed Income IQ leverages extensive analytical intelligence and data from S&P Capital IQ to look at regional corporate credit markets. All three regional reports, North America, Latin America and Europe, are accessible to each other through links within each report. Market trends are established using indices and yield curves. Credit trends look at ratings, CDS and probability of default data. In addition, the report highlights trends in financial ratios and issuance data.
- Overall, credit markets posted gains – Strong dollar appreciation and continued low interest rates helped drive fixed income returns.
- U.S. sovereign risk increased slightly this quarter and Germany replaced the U.S. as the sovereign with the lowest CDS spread out of the G6 nations.
- Risk signals improved throughout the region – Fixed income markets re-priced risk downwards this quarter. Z-spreads declined throughout all sectors and ratings categories. Median equity market-based and fundamental probabilities of default also decreased.
- Market activity moved to a 12-month high – Market activity across investment grade and high yield increased as the number of trades and quote volume jumped. Investment grade energy and high yield healthcare saw the largest changes in activity quarter over quarter.
- Issuance remains healthy as covenants slack continued – Issuance increased in most investment grade ratings categories on a year-over-year basis with the biggest increase coming from the BBB spectrum. Covenant protection decreased after two quarters of increases.