December rounded off the busiest year ever for issuance into credit markets.

As companies sought to raise liquidity and lock in low funding rates, most currencies saw records broken and, in particular, US Dollar markets saw around $2 trillion issued. Sterling had a busy year as well and of the 75 new issues that came to market, 73 ended tighter than reoffer with an average spread performance of -53bp versus reoffer. CHIG took most of these and still holds many although we have taken profits on several.

Sterling issuance included a fair amount of well received ESG related issuance and these performed well although most green premium has been priced out. As primary market activity declined towards the end of the year, demand remained robust helping spreads to remain well supported and we took profits on our BACR Green 1T 26’s, which had seen its spread tighten to around +110bp from +175bp at issuance. We also took profits on some older positions including some short dated Close Brothers risk trading on a yield of 0.25%. We look forward to increased Sterling issuance now that we have some stability due to the late Brexit deal, skinny as it was, and indeed the first week of 2021 has been busy.

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