Situation Room: IG bond pricing: new issue vs. the month end

Research evidence excerpt

Situation Room: IG bond pricing: new issue vs. the month end

Accessible version

Situation Room

IG bond pricing: new issue vs. the month

end

Credit Analysis

IG bond pricing: new issue vs. the month end 19 May 2026

Many benchmarked investors buy new issues around the month end, just before they roll Credit Strategy

into the index. This pent-up demand adds to a ~3% outperformance in spreads between United States

the new issue pricing in the primary market and the month-end pricing in the secondary Cross Product

market (Exhibit 1, Exhibit 4). Yuri Seliger

Credit Strategist

A two-step process BofAS+1 646 855 7209

New issues typically trade about 2-3bps tighter than the new issue spread in secondary yuri.seliger@bofa.com

market directly after issuance (the “break performance,” Exhibit 5). Then, the recent new Sohyun Marie Lee

issue continue to outperform into the month-end, outperforming the index by an CreditBofAS Strategist

additional 1% during the last 9 trading days leading up to the index rebalancing (Exhibit +1 646 855 7217

sohyun.lee@bofa.com

2). That is equivalent to ~1bps of spread assuming index spread at 80bps.

A front-end story In this report

The month-end new issue outperformance is particularly strong in the front-end of the

curve. The 3-5yr bonds trade 5bps tighter at the month end than at new issue, on Daily supply snapshot

average. The effect tends to be more modest for longer maturities (Exhibit 3).

Daily dealer inventories update

Exhibit 1: New issues trade ~2.6% tighter on day before index entry compared to pricing Daily HG fund flows New issues trade about 2.6% tighter on day before rebalancing date from pricing.

Daily foreign demand tracker 0.5% 0.2%

0.0%

-0.5% Link to notable research spread

in -1.0% Global Fund Manager Survey: In It to