For the past couple of years the European market has been guilty of sifting its largest issues through to the second half of the year. Pair this with a much leaner first half and you have market dynamics that disrupt the supply and demand scenario and send pricing jutting out. But as we move into the second half, the growing pipeline promises to keep the market as busy as the first six months. Investor demand, however, seems unaffected.
According to Merrill Lynch, structured credit spreads tightened from March and kept steady over the summer months. "With strong volumes forecast for September and into the fourth quarter, some further supply driven spread widening could be expected," reported analysts at Commerzbank. "However the hiatus in volumes over the last three months coupled with the significant investor allocation held back for the fourth quarter, will counterbalance any supply side driven influence and drive some spread tightening."