By Will Caiger-Smith
NEW YORK, June 23 (IFR) - US credit markets ralliedThursday, led by UK banks, as Britain voted on whether to remainin the European Union.
The IG CDX 26 index was 2.95bp tighter at 75.85bp, accordingto Tradeweb. Stocks were also sharply higher with the Dow JonesIndustrial Average rising by 178 points, while 10-year Treasuryyields jumped back up above 1.7%.
Britain is voting on whether to stay or leave the EuropeanUnion, with results expected to begin filtering out around 11pmNew York time.
Barclays' 5.2% May 2026 subordinated bonds were around 31bptighter on the day and around 70bp tighter on the week atG+274bp, according to a syndicate banker.
A small ticket of Lloyds Banking Groups' 4.65% March 2026straded at G+256bp, 10bp tighter on the day, the banker said.
"Tier 2 is going crazy," said another syndicate banker. "I'msurprised people are going this strongly in one direction sosoon. It's quite remarkable."
Royal Bank of Scotland's 4.8% April 2026 senior holdingcompany notes were 25bp tighter at G+245bp, said the firstbanker.
High-grade issuance has slowed dramatically over the pasttwo weeks with just US$7.2bn pricing.
But bankers are predicting issuers will jump into the marketnext week if Britons choose to stay.
"There is a ton of people circling and they could jump in atvery short notice," said one syndicate banker.
Although small, US-focused issuers could come Friday, mostwould probably wait until next week, he added.
"People need a day to take a deep breath and work out whatis going on," he said.
Assuming the UK votes to remain, some bankers said nextweek's volumes could top US$30bn despite Friday's holiday.
"Everyone is going to use every bit of the four days we havenext week," said a syndicate head, adding that issuance shouldbe equally split between banks and corporates.
The definitive result of the UK referendum is due on Friday. (Reporting by Will Caiger-Smith; editing by ShankarRamakrishnan)