While the credit markets were not as hot as they were Monday, there were some interesting deals launched - a few investors might consider looking into.
Tuesday's deals included:
|Computer Sciences (CSC)||Baa2/BBB||3yr||$350MM||+220|
|Tucson Electric Pwr (UNS)||Baa3/BBB-||10.5yr||$150MM||+220|
|AstraZeneca PLC (AZN)||A1/AA-||7yr||$1,000MM||+85|
|News America Inc. (NWSA)||Baa1/BBB+||10yr||$1,000MM||+140|
In order to calculate the yield, the following are the relevant treasury points:
- 3yr: 0.33%
- 5yr: 0.67%
- 7yr: 1.13%
- 10yr: 1.71%
- 30yr: 2.86%
The credit markets continued their slow and steady march tighter as risk continues to be en vogue. The way I view spreads - as risk premiums relative to the risk free rate - the market continues to have value.
The cash market and the credit default swap market (utilizing the CDX index) had slightly different opinions:
Notice how on a month to date basis, both cash and CDS markets have been tightening, showing both investor appetite for spread product and the willingness to add risk.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: This article is for informational purposes only, it is not a recommendation to buy or sell any security and is strictly the opinion of Rubicon Associates LLC. Every investor is strongly encouraged to do their own research prior to investing.