Credit Markets And The U.S. 2020 Election

With two weeks leading up to an historic election in the United States, the credit markets continue to move forward at full speed. As we discussed in "Tapping opportunity in the debt markets", the high yield bond market has proven to be a ready source of liquidity in 2020, already topping previous annual issuance records by the end of the third quarter. Buoyed by the equity markets, private debt has also shown surprising resilience and activity remains strong.

Credit markets remain active

The increasing likelihood of a contested election and the threat of a second COVID-19 wave have contributed to heated credit markets in recent weeks. Sponsors and borrowers are securing additional liquidity while interest rates are low, and sponsors are using favorable lending terms to declare dividends, as evidenced by the fact that the month of September recorded the highest volume of dividend recapitalizations since October 2016. As a consequence, credit terms such as dollar