Corporate Credit Traders to Watch for Taper Announcement at Fed Meeting

Corporate credit traders will watch for a taper announcement at the Federal Reserve meeting on Wednesday and any indications of a timeline. U.S. high-grade debt sales should pick up next week with about $25 billion of expected supply, while the pipeline for new leveraged loans and junk bonds looks lighter, according to surveys of bank analysts and underwriters.

Investment-grade borrowers will likely seek to get ahead of the Fed, making the week frontloaded with new issues if the window is open. Interest rates are rising in anticipation that the central bank, which is widely expected to outline plans for tapering its asset purchases, might need to accelerate the process of policy tightening to combat inflation risks. This will help incentivize any issuers with funding needs to go as soon as possible.