Merry month of May had two faces. Whereas during the first three weeks credit markets continued to benefit from the positive stance towards that asset class, market participants showed their irritation as reaction to the Bernanke speech on May 22 (“The Fed could decide to scale back its monetary stimulus at one of its “next few meetings” if it is confident the economy is poised for continued improvement…”), which raised speculation about the tapering of the asset purchase program of the Federal Reserve and had a significant impact on bond yields and interest curves.

After last week's spread widening, synthetic credits resumed their upside drift on month-end with the iTraxx Main exceeding the 100 bps level and ending at 103 bps; the Crossover surged 17bp to 421 bps. Financials were affected as well, with the SenFin widening to 146 bps and the SubFin to 211 bps. The HG cash market performed weaker too and profit taking, especially in core names, could be observed. Selling interest was focused on mid to long-term maturities across all sectors.

(Source YCAP AM ; June 2013)

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