Skinny Caa Spread Defies Default Outlook (Capital Markets Research)

WEEKLY MARKET OUTLOOK MARCH 9, 2017 CAPITAL MARKETS RESEARCH Moodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research, Inc is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products. For further detail, please see the last page. Skinny Caa Spread Defies Default Outlook Credit Markets Review and Outlook by John Lonski Skinny Caa Spread Defies Default Outlook. ¯ FULL STORY PAGE 2 The Week Ahead We preview economic reports and forecasts from the US, UK/Europe, and Asia/Pacific regions. ¯ FULL STORY PAGE 4 The Long View Check our chart here for forecast summaries of key credit market metrics. Full updated stories, After soaring by 51% annually in Q1-2017, US$-priced high- yield bond offerings are expected to dip by -2% annually during April- December 2017, begin on page 12. ¯ FULL STORY PAGE 12 Ratings Round-Up by Njundu Sanneh Upgrades Still Strong. ¯ FULL STORY PAGE 16 Market Data Credit spreads, CDS movers, issuance. ¯ FULL STORY PAGE 18 Moodys Capital Markets Research recent publications Links to commentaries on: Europe, yes, hike, VIX, rates, France, demography, boom, Japan, reform, India, Turkey, risk, UK, deregulation, potential, BAC, optimism, Portugal, DB, revisions, outlook. ¯ FULL STORY PAGE 22 Credit Spreads Investment Grade: Year-end 2017 spread to exceed its recent 118 bp. High Yield: After recent spread of 3686 bp, it may approximate 475 bp by year-end 2017. Defaults US HY default rate: after January 2017s 5.8%, Moodys Credit Policy Group forecasts it near 3.7% by 4Q 2017. Issuance In 2016, US$-denominated IG bond issuance grew by 5.5% to a record $1.411 trillion, while US$-priced high-yield bond issuance fell by -3.5% to $341 billion. For 2017, For 2017, US$-denominated IG bond issuance may rise by 2.9%, while US$-priced high-yield bond issuance may increase by 7.9%. Click here for Moodys Credit Outlook, our sister publication containing Moodys rating agency analysis of recent news events, summaries of recent rating changes, and summaries of recent research. Moodys Capital Markets Research, Inc. Weekly Market Outlook Contributors: David W. Munves, CFA 1.212.553.2844 david.munves@moodys.com John Lonski 1.212.553.7144 john.lonski@moodys.com Ben Garber 1.212.553.4732 benjamin.garber@moodys.com Njundu Sanneh 1.212.553.4036 njundu.sanneh@moodys.com Yukyung Choi 1.212.553.0906 yukyung.choi@moodys.com Irina Baron 1.212.553.4307 irina.baron@moodys.com Franklin Kim 1.212.553.4419 franklin.kim@moodys.com Xian (Peter) Li 1.212.553.1404 Xian.li@moodys.com Moody's Analytics/Europe: Tomas Holinka +420 ( 221) 666-384 Tomas.holinka@moodys.com Moody's Analytics/Asia-Pacific: Katrina Ell +61 (2) 9270-8159 Katrina.ell@moodys.com Fara...