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Fixed Income IQ: Q4 2014

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. 

Report highlights:

  • Overall credit markets continued to remain volatile in Q4 2014 – Plummeting oil prices as well as slower global growth sent markets moving sharply. Investment grade outperformed high yield as investors moved towards less risky assets.
  • Risk is re-priced upwards – The fixed income markets re-priced risk upwards this quarter. Z-spreads increased throughout all sectors and ratings categories. Median equity market-based probabilities of default increased. Notably, the highest increase was in energy as oil prices dropped significantly.
  • Market Activity moved lower in Q4 – Market activity in the high yield space moved to its lowest levels for the year in December, led by utilities, telecom, and materials.
  • Issuance remains healthy but investors are mindful of risk – Issuance increased in most investment grade ratings categories on a YoY basis. Investors are mindful of elevated risk levels as the percentage of covenants in new issuances have increased.

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