No new offerings were announced in the US investment-grade and high-yield bond markets for the third consecutive day as credit spreads, or the cost of issuance, continued to increase on worries that US President Donald Trump’s tariff war could lead to a recession.
Since Trump imposed sweeping tariffs on US imports on Wednesday, credit spreads, which are the premium companies paid on bonds over Treasuries, have widened sharply to two-year lows.
The average investment-grade spreads were at 120 basis points to end Monday trading, or 24 bps wider since last Wednesday, the widest they have been since November 2023.
The average high-yield spreads at 461 bps have widened 119 bps since Wednesday and are now also at the widest level since June 2023, according to ICE BAML data.
Guy LeBas, chief fixed income strategist at Janney Capital Management, said he expected to see some dip buying to emerge at some point if equity markets show signs of recovering from the recent selloff.
“These are just sloppy, sloppy markets that don’t follow any measure of fundamentals or technical,” he said.
The halt in issuance followed a period last month when, for the first time since the pandemic, companies struggled to issue bonds at the price they wanted – a situation that continued on Monday, two bond syndicate bankers said.
