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Weekly Market Summary
Aug 11 to Aug 15, 2025
Extra Credit*
- The One Big Beautiful Bill (OBBB) introduces changes to corporate taxation, lowering taxes on domestic capex and Research and Development while increasing taxes on foreign earnings. This should be positive for growth and corporate profit margins. The biggest effect on credit markets is likely to be on issuance, both public and private. The tax shield expands for companies that have higher interest expense deductibility cap. Most beneficial for leveraged capex-heavy companies with low interest coverage that are cash taxpayers.
- Main effect on credit: Increased supply in both public and private markets. Corporates are likely to tap both public and private markets to finance new investments to take advantage of the OBBB's tax benefits. The bill is designed to encourage onshoring and innovation through capex and Research and Development tax incentives. The sectors most affected are likely to be manufacturing, utilities, and tech, driven by capex, and pharma, driven by Research and Development.
- The bill should lead to large cash tax savings for some companies. Certain companies have already started to communicate expectations of significant increases in free cash flow. This cash will increase their financial flexibility, including for strategic investments and share and debt buybacks.
As of 8/12/25.
Previous reports
*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Credit Suisse Leverage Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.
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