Is the recent surge in issuance sustainable? Is it a function of either a backlog or uncertainty over future market conditions?
Miles Millard, European head of debt capital markets, Deutsche Bank
The high level of activity we have witnessed this month has been encouraging and reflects the enormous backlog of issuance, particularly in the FIG space. We should expect further market volatility, and borrowers should take advantage of issuance windows as they open.
Roberto Isolani, joint head of global capital markets at UBS
It is sustainable as the issuance backlog has been matched by a liquidity backlog among investors. Judging by recent order books, there is a huge amount of cash out there (nearly all the recent deals have been at least twice oversubscribed) and, given the lack of issuance we saw during the earlier months of the crisis, investors are keen to invest again. Spreads in the corporate sector have come in very quickly in a very short space of time. Redemptions are still healthy, which is obviously supportive of the market volumes.
Issuers are being much more responsive to investors’ spread demands – a healthy flow of deals will continue.
Notwithstanding the above, it would take very little to upset the market again. It would only take another big headline to upset the apple cart.