Sterling credit spreads remained steady amidst relative calm in sovereign benchmarks after the Q1 volatility, the worst of which was seen in February. Inflationary fears remain however, not helped by widespread commodity price moves and there are some pretty dramatic long term charts out there in the likes of copper and lumber to name only two.

New issuance in the primary market remained busy although not quite at the levels we became used to last year, Sterling issuance was robust though. JP Morgan Chase, after pricing $13 billion in USD, issued in GBP for the first time in nearly a decade with a £1.25 billion 5-year and a £750 million 12-year, both heavily oversubscribed and pricing tight. We took both as well as another well-supported 9-year issue from Coventry Building Society.

In secondary markets we sold some recently issued Goldman Sachs 6-year due to a restricted allocation and took profits on several other holdings including some CK Hutchison 27’s. We also sold some longer dated issues including Wessex Water 36’s as we continued to reduce duration.