Investment grade and High yield spreads will tighten supporting bond issuance bonanza
A confident ECB will most likely reinforce the corporate space. As a consequence, we might see even tighter spreads in the primary market. Beware from this trend because although valuations will be supported in the short-term, in the long-term, we might see high volumes of downgrades. It's the perfect time to take profit from selected riskier assets, especially from those which have partially rebounded but are doomed to recover slowly from the coronavirus crisis such as airlines. If on Tuesday you thought that a 3% yield on a 5-years Ryanair bond (XS2228260043) was good, you might reconsider it as the second wave of COVID-19 is approaching.