Strong appetite for new AT1/RT1 deals

After trade fears abated again last week, credit spreads tightened back with an outperformance of HY (particularly €HY, see chart opposite, which outperformed its US counterparts by 4bp last week) . In the financial sector, it is worth noticing the outperformance of SNP (beta adjusted), with more than 6bp tightening (more than bank T2s at -6bp while AT1 spreads tightened by 11bp). In the Corporate IG space, basis continue to normalize with an outperformance of cash (-3.3bp last week) vs CDS by half a basis point on average, despite the fact that credit indices outperformed equities during the last 3 sessions. Sector-wise, Autos, Tech and Healthcare followed by Telcos were the main outperformers last week, with spread-tightening of 4 to 5bp vs swaps, while Retail, Utilities and REITs were lagging a bit behind (-2 to -3bp) . Primary-wise, despite the short week, corporate issuers managed to print around €6.5bn new deals last week, 3.5x oversubscribed on average (see table in the following page for more details) . The absence of major secondary repricing and limited NIPs confirm there is enough cash to invest on the investors’ side. Financials outperformed corporates in the primary market with an average oversubscription of 5x last week , with new AT1 and RT1 deals outperforming the market.