New issue premiums could spike amid US woes

Bond investors could demand higher new issue premiums in the coming days, especially if the US debt ceiling debate remains unresolved triggering risk aversion sentiment.

US President Barack Obama said he would accept a short-term increase in the country’s borrowing authority in order to avoid a crisis.

Chien Mi Wong

October 08, 2013

New bond issuance – especially higher beta names – could struggle to price competitively in the coming days. The ongoing US debt ceiling debacle could prompt credit investors to demand higher premiums, which are hovering around the 5bp-10bp level, according to experts.

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