UK

Following yesterday’s release of Italian energy company Enel's 2023 annual sustainability report, it was confirmed that they had failed to meet the emissions reduction key performance indicator (KPI) linked to a number of their sustainability linked bonds (SLBs).

Volatility made an unwanted come back this week. A combination of rising tensions in the Middle East, strong Consumer Price Index (CPI) and labour market data in the US in previous days, and markets that looked somewhat expensive in certain sectors, all conspired to cause a widening in spreads and a correction in equity prices.

The US Consumer Price Index (CPI) surprised on the upside for the third month in a row. There was nowhere to hide in the release with a majority of sub categories and sub aggregates posting worse numbers than expected.

We previously blogged about Thames Water in July last year but it’s rapidly refloated to the top of UK credit market concerns. Following more recent events, where do we think Thames Water go from here?

After delivering a stunning 2023, collateralised loan obligations (CLOs) were once again one of the top performers in Q1. That leaves us with the question, where do we go from here?

Last week's data deluge from the UK painted a mixed picture for the economy, offering insights into inflation, growth, and the possible path for interest rates.

US corporate bond primary markets have had a robust start to the year as both Investment Grade (IG) and High Yield (HY) companies have looked to take advantage of the recent rally in rates and spreads that we have experienced since Fed Chairman Powell's December FOMC comments up until his more cautious stance in the January meeting.

Next week markets will receive January Consumer Price Index (CPI) inflation prints from the US and the UK, which will no doubt be widely followed. In the US, the Bloomberg consensus is for a significant drop in headline CPI from 3.4% to 2.9%, while core is expected to decline by a less spectacular 20 bps from 3.9% to 3.7%. For the UK, consensus is for a small increase in CPI inflation from 4.0% to 4.1%.

A few weeks ago, JP Morgan skipped a call on one of its $1,000 par preference shares (“US Prefs”). The perpetual notes had a coupon of 6.75% payable until Jan’24, with a subsequent reset of 3-month SOFR + 404bps. Post the non-call, the coupon changed to 9.35% and will continue to reset every 3 months.

Low interest rates feel like a lifetime ago, but it was only in June 2022 that the Bank of England increased the base rate to 1.25%, the first time it moved above 0.75% since March 2009.

The long-awaited Personal Income and Outlays report for December was released last Friday. This piece produced by the U.S.’ Bureau of Economic Analysis contains information about personal income, savings rates and very importantly the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge of the economy.

UK banks will start reporting fourth-quarter 2023 earnings only in about a month or so, which feels like an eternity for eager bank analysts. Fortunately, the Bank of England published two interesting reports last week that offer a useful and insightful preview into last quarter’s key lending, asset quality and funding trends.