European Credit Weekly: Heatwaves

Research evidence excerpt

European Credit Weekly: Heatwaves

J P M O R G A N Europe Credit Research

26 June 2026

European Credit Weekly

Heatwaves

• Our oil analysts have revised down their year-end Brent target to $78/bbl, Europe Corporate Credit - Strategy

AC which, if materialised, would be manageable for credit and keep us on Matthew Bailey

track for our baseline spread forecasts. (44-20) 7134-2384

• By contrast, European gas markets are starting to become a bigger risk to matthew.a.bailey@jpmorgan.comAC

European credit, with the heatwave this week adding additional pressure Daniel Lamy

(44-20) 7134-0467

through lower wind and nuclear power generation, higher cooling daniel.lamy@jpmorgan.com

demand, and low water levels in the Rhine. AC Samuel Hayani

• We are heading into the seasonally strongest period of the year, with (44 20) 3493-4001

investment grade spreads tightening by a median 14bp in July. samuel.hayani@jpmorgan.com

J.P. Morgan Securities plc

Euro credit traded essentially flat this week, with investment grade unchanged and

high yield 2bp wider. The main focus continues to be on the Middle East following

the signing of the US-Iran MoU, with a surge in visible oil tanker transits this week

to almost half normal levels according to Bloomberg data, and potentially even

higher in practice considering that this only includes ships with their AIS turned

on (Figure 1DailyStraitofHormuzTankerTransits). This drove Brent oil prices to lows of ~$72.5/bbl, back to the pre-war

level from 27-February (Figure 2Brent1stOilPrice,$/bl).

Notably, our commodity analysts substantially revised down their year-end Brent

target to $78/bbl this week, which, while slightly above the current level, we

believe would be completely manageable for credit markets (see here). If this plays