S&P Global: “Jan 16 “This week in credit”

S&P Global Ratings today published the latest edition of its weekly newsletter, "This Week In Credit," a data-driven research snapshot that provides forward-looking, actionable insights on weekly market-moving credit trends every Monday.

The Top Line

A better tone for risk assets persists, with data suggesting inflation may have peaked--but pay heed--this is likely just an important checkpoint in a longer race for credit markets. Central bank mandates suggest more caution than sentiment might indicate in terms of rate tightening. In addition, expect the impact from the fastest pace of rate hikes in recent history to increasingly show in issuers' operating performance and trading outlooks. Fourth-quarter corporate reporting season, which kicks off in earnest this week, will be accompanied by a slew of data releases including Chinese fourth-quarter and full-year GDP (Tuesday) and U.S retail sales (Wednesday).

Key Takeaways

• Issuers rated 'B-' and below-led downgrades last week. Of these, most were in consumer-driven sectors as budget-conscious households, price inflation, and supply chain constraints continued to weigh on lower-rated issuers.
• Argentina defaulted due to a distressed exchange, it's second selective default in three years.
  
• Credit spreads fell again last week and are now below or close to five-year averages. Benchmark yields were also tighter, while global issuance remained slow outside Europe, which was bolstered by one large transaction.