(Corrects HY widest data in para 3 and bullet)
By Shankar Ramakrishnan
(Reuters) – No new offerings were announced in the U.S. investment-grade and high-yield bond markets for the third consecutive day as credit spreads or the cost of issuance continued to increase on worries that U.S. President Donald Trump’s tariff war could lead to a recession.
Since Trump imposed sweeping tariffs on U.S. imports on Wednesday, credit spreads or the premium companies paid on bonds over Treasuries have widened sharply to new two-year lows.
The average investment-grade spreads were at 114 basis points on Friday, the latest available data, or 18bp wider since last Wednesday which is also the widest they has been since November 2023.
The average high-yield spreads at 445bp have widened 103bp since Wednesday and are now at the widest levels since November 2023, according to ICE BAML data.
IG spreads were an additional 3bp wider this morning, said BMO credit strategist Daniel Krieter in a note.
The halt followed a period last month when, for the first time since the pandemic, companies struggled to issue bonds at the price they wanted – a situation that continues on Monday, two bond syndicate bankers said.
There were a few companies that looked early to issue bonds but they decided to not go ahead as continued market volatility meant they were unsure demand would be enough to support issuance without being asked to pay a massive premium, said one syndicate banker who preferred to be unnamed.
“The most pressing question at this point is obviously what would begin to turn the narrative and give risk assets some respite from the aggressive selling of the past few sessions,” said Krieter.
A softening in tone from the administration or more urgency to negotiate from America’s trading partners would help “though the weekend’s developments don’t provide much hope for either outcome in the near term,” he said.
(Reporting by Shankar Ramakrishnan, Editing by Nick Zieminski)
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