05 December 2013 by HCM
This grapple offers to view simultaneously the risk premium (expressed as a spread) and the volume traded.
In September 2013, VZ (Verizon) brought the biggest bond offering the market has ever experienced, issuing $50bln of debt. There was a significant hedging activity around the deal, leading to a surge in volume (peaking at 550m$ per day) and a peak in spread. The generous pricing of the deal for investors made it a tremendous success and the long maturity of some tranches changed the debt profile, taking financing needs off the agenda. The 5y CDS spread came back with a vengeance, and now trades at the tightest level we have seen for years.