Spread movement discouraging issuers in senior
Uncertainty over the economic outlook for peripheral Europe hurt the senior unsecured market on Monday, with rising yields in Spanish and Italian government debt putting pressure on secondary cash spreads. Bankers said none of the senior transactions issued over the past months were tighter than re-offer, adding that issuers were discouraged from primary issuance by the widening, even though the market was still open.
“The shorts don’t want to go any shorter for fear of some huge wham-bam solution to the crisis, and the long guys don’t want to go any longer for fear of a crash,” said one banker of the widening spreads in the secondary market.
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