Almost Daily Grant's on the year in credit

A year to remember in credit, as the March panic has quickly given way to something resembling an opposing extreme.  Last week, the Goldman Sachs Financial Conditions Index reached its most accommodative level on record going back to 1990, while total corporate bond issuance foots to a record $2.5 trillion for the year according to Bank of America.  Thanks to that borrowing spree, gross leverage among investment grade and junk borrowers has reached record highs near four and six times Ebitda, respectively, the Financial Times reports today. 

Needless to say, the Federal Reserve’s March 23 announcement that it would, for the first time, directly purchase investment-grade corporate debt, loomed large in the bond market’s dramatic turnaround. Indeed, Jonny Fine, U.S. head of debt syndicate at Goldman Sachs, describes those interventions to the FT as: “the most important piece of central bank policymaking I have seen in my career.”

~ Almost Daily Grant's, December 22, 2020