Trading platforms have reported a bumper month in February for credit trading. Multi-asset market operator Tradeweb has reported total trading volume for February 2023 of US$27.4 trillion, with an average daily volume (ADV) for the month a reported record US$1.43 trillion, an increase of 21.5 percent (%) year-over-year (YoY).
US government bond ADV was down 6.2% YoY to US$144.3 billion while European government bond ADV was up 2.9% to US$43.2 billion, as US retail government bond activity driven by rising rates was offset by declines in wholesale trading. European government bond volume was supported by heightened issuance and rates market volatility.
Fully electronic US credit ADV was up 28.2% YoY to US$5.1 billion and European credit ADV was up 4.5% to US$2.2 billion, which the market operator attributed to continued client adoption across Tradeweb trading protocols, including request-for-quote (RFQ), Tradeweb AllTrade and portfolio trading. Record activity in Tradeweb AllTrade, including sessions-based trading, supported activity in fully electronic US high yield (HY) and US investment grade (IG). Credit derivatives ADV was down 37.5% YoY to US$10.5 billion with overall market volumes lower due to subdued credit market volatility.
Municipal bonds ADV was up 34.3% YoY to US$337 million reflecting both institutional and retail client activity. Market volatility and elevated interest rates continued to boost volumes overall. Mortgage ADV was down 9.1% YoY to $167.7bn due to higher mortgage rates.
Rival MarketAxess recorded US$14.4 billion in total credit ADV which was up 25% from $11.6 billion in the prior year, with a 30% increase in US IG ADV to a reported record US$6.7 billion. February’s new issue calendar was robust with IG new issuance up approximately 78% year-over-year and up approximately 5% from January 2023 levels. US HY ADV saw a 43% increase to US$2.3 billion.
Chris Concannon, president and COO of MarketAxess commented, “In February we delivered 25% growth in total credit average daily volume to a record $14.4 billion, driven by 30% growth in high-grade to a record $6.7 billion, and 43% growth in high-yield to a record $2.3 billion. These results were generated in part by strong estimated market share gains in high-yield, Eurobonds and municipals, with record Open Trading average daily trading volume of $4.7 billion. Open Trading estimated price improvement was approximately $81 million in February and average estimated price improvement per million was approximately $908. Year-to-date, price improvement is running 27% above prior year levels. We believe that stronger industry volumes, estimated market share gains and a favourable macro backdrop, combined with stable average fees per million for total credit, are setting the stage for a strong 2023.”
Trading platform Trumid reported its ADV more than doubled year-over-year to a record US$3.7 billion and had over 1,000 users trading on the platform for the second month in a row. Improved engagement across Trumid’s client network resulted in a record number of users executing a trade each day in February, up 48% year-over-year. It also reported its average market share across new issue bonds (both high yield and investment grade) was 31.7%, with more than half of Trumid’s reported new issue volume in grey market trading.
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