As the broader rally in corporate spreads continues the primary market in corporate debt has returned from the grave in the past week with over $13 billion of deals finding their way into the ready hands of investors and several billion more slated to come before the end of the month. Even with this late surge of issuance, volume for the full month of August will remain light ($25-30 billion) compared to the deluge of supply we were experiencing earlier this year but the latest deals provide a stark contrast to the frozen state of the market in July. Much of the recent buoyancy has been attributed to the passing of the relatively uneventful passing of the August 14 SEC sign-off deadline and although the impact of this is clear, there are other reasons as well for the stronger tone in the market. In particular, the recent vibes from the equity market have been supportive with month-to-date gains in the major indices (Dow +5.3%, S&P500 +7.3%, NASDAQ +10.1%) and a substantial drop in implied volatility levels.
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