Last week, S&P Global data showed the war in Iran contributed to rising inflation and slowed services output growth to the weakest three-month pace since the start of 2024. S&P Global data highlighted that average prices this month for goods and services rose at the fastest pace since mid-2022, and that new order purchasing activity may have been bolstered by safety-stockpiling efforts, driven by supply availability and price-hike concerns amidst the war. These economic pressures led to notable climbs in treasury bond yields, with the five-year and 10-year (medium-term maturity) yields climbing 0.42% and 0.36% higher, respectively, since the start of the Iran war. As the economic impact of the ongoing war remains uncertain, US and Canadian central banks are expected to leave rates unchanged this Wednesday. Amidst this wartime volatility, Vanguard’s global head of fixed income, Sara Devereux, noted potentially attractive levels to extend portfolio duration and build portfolio resilience against potential growth risks—a sentiment echoed by North American weekly exchange-traded fund flows that suggested investors were adding to many bond funds with medium-term portfolio durations.

Over the last few months, the private credit industry continued to grapple with persistent concerns regarding lending standards, valuation transparency, software loan exposure, and rising fund redemption requests. Despite these headwinds, fixed-income-investor demand for private credit vehicle debt remained fairly robust. Blackstone’s private credit fund (BCRED) issued a USD$850 million, five-year fixed-rate bond, rated BBB- (the lowest tier of investment grade), which was priced to yield 6.2%. The successful issuance followed the prior week's Goldman Sachs private credit issuance of USD$750 million, which also exhibited outsized order demand. In related news, Blackstone and KKR led the debt restructuring of a USD$1.4 billion Affordable Care Inc private credit loan, after the dental services company faced difficulties servicing its debt and faced a deterioration in earnings. According to Bloomberg and a recent regulatory filing, Blackstone Private Credit reduced the loan's value to 69.8 cents on the dollar back on March 31.

Finally, AT&T Inc. looked to raise USD$6 billion through a five-part investment-grade bond sale with maturities ranging from seven to 40 years. The longest bond maturity, set at 2066, is priced to yield 6.33%. This issuance is in preparation for the company’s major network-expansion deal, specifically moving towards closing a USD$23 billion spectrum license purchase from EchoStar Corp, allowing AT&T to boost its 5G network capacity and fiber internet services. The proceeds are also earmarked for general corporate purposes, debt repayment, and pending acquisitions.