High yield rally continues as Middle East unrest fails to dent credit markets

The Middle Eastern crisis had little impact on the broader credit markets last month, as technical factors remain strong – particularly among high yield names.

Reaction from the credit markets to upheaval in the Arabic region was relatively muted last month, with traders reporting an uptick in volatility but no broad-based selling. Credit derivative indexes moved some 5% to 7.5% wider between February 21 and February 24, as oil prices spiked, but cash indexes were little changed.

“Markets have been hesitating but there’s been no consensus,” says a trader at a European dealer in London. “People haven’t wanted to take too much risk.”

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