Supply drought to keep covered spreads tight
Covered bond spreads are likely to remain well supported next week, with supply set to be thin on the ground. Though spreads are at their all-time tightest levels, market watchers will be closely monitoring the European Central Bank to see whether it lowers its order size in the primary market.
Spread differentials between different jurisdictions are now at their lowest levels since June 2007, according to analysts at Citi research.
Moreover, the yield curve is flatter than it has been at any time since the inception of the iBoxx covered bond indices 16 years ago.The one to three year ...