European credit traders have seen bid-ask spreads expand over the past two weeks, however this follows a notable tightening since summer, according to data from MarketAxess’s CP+ pricing service.
High yield bonds saw median bid ask spreads reduce continuously since early August, and in the final week of September they hit lows last seen in February 2025, at 0.17 price % of par (P%OP).
Investment grade (IG) bonds have seen far more volatile bid-ask spreads this year, albeit in a tighter range of 0.06-0.1 price % of par, versus the HY range of 0.17-0.25 price % of par.
The 13% jump in bid-ask spread from the final week of September to the week of 13 October for IG to 0.083 price % of par and 14% jump in HY median bid-ask spreads to 0.224 price % of par therefore reflects a high relative increase in trading costs but one which is closer to mean reversion than a significant jump.
Tracking the longer term trend on trading costs, and the nuances of bid-ask spreads is supportive of trading desks continued sourcing of market data to optimise their pricing pre-trade and for post-trade transaction cost analysis purposes, in order to get the best execution via their counterparties.
©Markets Media Europe 2025
