Another Day in Credit

Another day in the fixed income markets.

A quick look at the credit markets:

While volume was decent, the overall tone of the market was not.  As Europe continued to weigh heavy on participants, credit risk was not in favor.

New issues:

Kellogg-CoC                A3/BBB+  $1bn       10y   T+90

Church & Dwight      Baa3/BBB-   $250mm   5y   T+150

Hershey Co -CoC         A2/A        $350mm  10y   T+88

HealthCare Realty    Baa3/BBB-   $300mm  10y   T+262.5

Societe Generale      Aa2/A+       $250mm   3yFRN 3ml+132
Societe Generale      Aa2/A+       $1bn         3y    T+158
Societe Generale      Aa2/A+       $750mm   5y    T+175

Overall issuance volume was decent, but a little light.  Haven't seen the deals break, but most priced at the tight end of guidance so there isn't a lot of juice here.

Secondary volume was decent, but the tone was negative.  Below is the trace data showing the negative adv/dec ratio.

So how did the equity equivalents do (yeah, the ETFs):

 

JNK outperformed PFF today, as it has for the last 2 months.  While much has been said about the outflows recently, performance must not have gotten the memo.  PFF was outperforming until about September, but since then JNK has been on fire, following equities up (and if the past is any indicator, JNK has a bit to run to keep pace - below).

 

I am still a believer in credit here (yeah, we will have risk-free issues, but excess performance is another beast) as the risk premium is still wide to historical standards.

Disclosure:  Long LQD, AGG, various preferred and HY.