RELIEF that Brazil's sneeze would not for now result in the US and global economy catching flu enabled credit markets to pull back from the widening of last week on the back of improving stockmarkets. But as swap spreads tightened more rapidly than credit spreads, arbitrage was the victim and new issuance activity was relatively subdued. The pause should allow banks to clear some of their inventory, particularly at the long end and, if Latin America remains calm, the stage is set for issuance to pick up next week. The new issue pipeline is growing, adding to several deals that were delayed this week, such as DePfa's Eu3bn-plus 10 year global.
January 22, 1999