Normalisation of the bond market
The bond market continued its march towards normalisation during the third quarter. After widening dramatically in mid-March, credit spreads have returned in most cases to the levels seen at 1 January.
That also applies to credit spreads in the property sector. The spread for five-year Entra bonds rose from 60 basis points (bps) in February to 200 at 31 March. It then fell to 140 bps in May, and has continued its decline to 80 bps now. While the level today is a little higher than the low point in February, it is fairly similar to the one generally seen in recent years.
Source: UNION and DNB MarketsTerms for Olav Thon, which has high exposure to retail, have worsened relatively speaking. The differential between it and Entra, which was virtually zero up to last year, is now 50 bps.
After market volatility and turmoil helped to persuade both bond issuers and investors to sit largely on the fence during the second quarter, liquidity in the bond market was fully restored in July-September. Many new issues were conducted in the past quarter, and NOK 13.5 billion in property bonds have been issued during the year so far.
The big companies have naturally taken advantage of a more favourable credit market, but a number of bonds have also been issued in special purpose vehicle structures.