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All Bulled Up

11 July 2016 by lberuti

The credit market enjoyed a positive session today. The bar was set pretty high on Friday, but investors did not blink and they pushed risk premia even tighter across the board. The positive tone begun in Asia where Japan’s PM Shinzo Abe’s coalition won the upper house election and secured a comfortable majority with his coalition partners. Developments in UK politics where Andrea Leadsom quit the race for the Tory leadership and cleared the way for Theresa May to become UK’s next prime minister were taken as a sign that the political turmoil is easing and interpreted bullishly. Most credits benefitted, and, unsurprisingly, UK related names which have been punished recently outperformed. In some instances, combined with company specific news, it led to some outsized gain. VUECIN’s (Vougeot) 5 year CDS tightened by 30bps at 367bps as Odeon was rumoured to be in advanced takeover talks. MTNLN’s (Matalan) 5 year CDS tightened by 4.5pts upfront after the company published decent first quarter results.