Markets to tread cautiously and prepping for corporate refinancing troubles ahead

Published on 4 December 2023

Francesco Castelli, head of credit strategy at Banor Capital, discusses the liquidity environment going into year-end and his thoughts on the Goldilocks scenario priced into the markets. He also warns of corporate refinancing troubles set to cause problems in the new year and unpacks his adjusted outlook on bank credit.

North America

  • Equities volumes and spreads at average ranges for the year to date. US IG saw highest weekly volumes all year and favourable liquidity.
  • Data: ISM Services report Dec 5, Mortgage Applications on December 6, and Non-Farm Payroll and Unemployment numbers on December 8.
  • Primary Equities: 4 IPOs expected at $40 million. The biggest is SolarMax Technology at $18 million.
  • US axe data, which is within normal ranges, indicates slightly higher proportion of bids versus asks in credit.

Europe and the UK

  • Equities volumes saw spikes in activity but liquidity remained good for the year to date. Euro IG volumes climbed week on week and spreads were tight compared to the same week in 2022.
  • Data: Producer Prices on December 5, Retail Sales on December 6, and GDP Growth on December 7.
  • Primary Equities: No IPOs are expected on European exchanges this week.
  • EU axe data, which is within normal ranges, suggests a higher proportion of EU dealer bids versus asks in credit
  • GBP axe data, within normal ranges, suggests slightly higher proportion of net selling versus buying of credit