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ABA
July 06, 2018  

Midweek Holiday Halts Secondary Trades

Secondary-market activity has stalled.

This week started slow as industry participants took time off ahead of Independence Day. Trading then froze across asset classes, with no formal bid lists on Thursday or Friday. “It’s dead,” one trader said.

According to Empirasign, asset-backed bond trades totaled $117.8 million on July 2-3, down 83% from the week-earlier timeframe. Collateralized loan obligation trades totaled $32 million, down 79%. Mortgage-bond trades totaled $3.9 million, down 97.6%.

In contrast to heavy new-deal supply, secondary-market trading already has been sluggish for much of this year. Last week, for example, traders were focused on exchanges meant to get bondholders’ books in order for the end of the second quarter.

Total secondary-market trades of structured products totaled $271.8 million from Jan. 1 to July 4, down 9% from a year earlier, according to Finra’s Trade Execution and Compliance Engine.

Another trader said he hopes the current pause will make for a busier week starting July 9. “Some people were in the office, but it was very hard to convince them to trade anything,” he said. “Next week will have to be better.” ?