It said Lebanon's credit spreads
have outperformed most peers since June 2019 due to improving risk sentiment and to the announcement that Qatar bought Lebanese Eurobonds as part of the pledge it made in January 2019 to acquire $500 million worth of Lebanese Eurobonds.
Summary: UAE credit spreads
for a long duration bonds have widened by 5 basis points since May
Third, additional tariffs and bad news coming from US-China trade negotiations often produce a deterioration in sentiment that may lead to a tightening in financial conditions, i.e., lower equity prices, higher credit spreads
and less availability of credit.
A bout of risk-off sentiment started with widening credit spreads
and tighter financial conditions in general.
tightened Friday with the Bloomberg Barclays index at 147 bps Friday versus 148 bps Thursday.
For the year ahead, the Research team forecasts modest gains in equities and credit, a weaker dollar, widening credit spreads
, and a flattening to inverted yield curve, signaling a tighter squeeze on liquidity that calls for higher levels of volatility.
To identify disruptions in credit markets, research on the role of asset prices in economic fluctuations has focused on the information content of various corporate credit spreads
. This prior research, however, finds mixed results in the ability of credit spreads
to forecast economic activity.
"Despite the pressures put on markets by rising US interest rates and narrowing credit spreads
, certain credit strategies may present investors with potentially significant opportunities," said Fraser in the white paper.
An analogous event occurred in early-2016 when the warranted (at least directionally, though probably not in magnitude) sell-off in HY energy credit (energy comprises 10 to 15 percent of the overall HY space) infected the entire HY space, sending credit spreads
to recession-type levels despite non-energy HY defaults remaining near zero.<br />Also, beyond issuing bonds to the HY market, many junk bond issuers also employ a great deal of bank debt, which typically fluctuates with short-term interest rates.
Following this, we set up a new fuzzy form pricing formula for CDS, the simulation analysis of which shows that all kinds of fuzziness in the market have a significant impact on credit spreads
. Using random analysis and fuzzy numbers, one can think of more uncertain available sources than the processes of looping default and investor subjective judgment on the financial markets, which broadens the scope of possible credit spreads
The Research team forecasts modest returns in equities and credit, negative bond returns, a stronger dollar, higher levels of volatility and tighter credit spreads