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Bailey McCann, Opalesque New York:

Debt markets are likely to remain somewhat uneven for the remainder of 2024, according to Apollo Global Management's mid-year outlook. Apollo says strong demand for corporate debt has propped up primary markets this year but analysts have seen signs of distress in other parts of the debt market.

May was a solid month for primary markets. US investment grade issuance set a first-quarter record for new deal activity and volumes through May hit almost $750 billion, up 24% from the same period last year. May was the most active month in the US high-yield primary market in nearly three years, pushing year-to-date issuance over $150 billion, nearly as much as the total supply for all of 2023.

"We expect investment grade bonds and BB spreads will remain stable despite historically tight valuations given supportive technicals and strong credit metrics," write the authors of the outlook. "Meanwhile, the outlook for lower-quality credit is more uncertain: Credit spreads across the B/CCC universe could be pressured if the economic backdrop deteriorates and the earnings tailwind from strong economic growth subsides."

Apollo says they've noticed some fragmentation in the liquidity of the investment grade market. Older vintages and smaller bond tranches have seen liquidity deteriorate over the first half the year. Apollo suggests that some of this could be the result of ETFs.

"This fragmentation in IG trading volumes likely s......................

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