US credit average daily notional volumes edged up in February, reaching US$62 billion – up 13% year-on-year (YoY) but only marginally increasing from the record US$61 billion recorded in January.
Average daily trade sizes also grew, rising 19% YoY and 4% month-on-month (MoM) to US$466 thousand. Trades over US$3 million make up 75% of notional traded, a recent Coalition Greenwich report notes, but by count the majority (71.3%) of trades in February were sub-US$100 thousand. Just 1.7% were over US$5 million.
Most small trades are executed electronically, but larger (US$5 million+) trades remain voice- or chat-executed. These trades “remain the holy grail for trading venues and the fastest path toward increased electronification broadly,” Coalition Greenwich observes.
Electronic trading was far from influential in driving activity last month. While acknowledging its impact on market structure, Coalition Greenwich states that macro and geopolitical uncertainty were the driving forces behind trading activity in February.
Investment grade (IG) e-trading was down one percentage point YoY and remained steady MoM at 48% of volumes. High yield (HY) e-trading also fell one percentage point YoY and two percentage points MoM to 29%.
READ MORE: Volumes boom, e-trading stalls in US credit
Portfolio trading was up one percentage point MoM and 1.5 percentage points YoY to 12.4% of total volumes. The largest PT trade over the month was US$1.3 billion on 18 February.
“Despite portfolio trading’s growth, dealers continue to struggle to execute these trades profitably, save a small few,” stated Coalition Greenwich.
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