Though all of the EOC questions from reading 24 are garbage and a waste ot time, I would like to understand this particular issue being addressed in Q15
Issuance of new bonds - Will it winden or narrow the credit spreads?
I though the primary market validates the offering and pricing and hence the spread will narrow and cause price appreciation?
think in terms of supply demand…manager expects there will be lot of A-rated bond issuances so supply will be more, resulting in widening of spreads. Opposite happend when issuance goes down.
imo, the difference is context, what you are saying is correct if we look on standalone basis, but here we need to look on a comparitive basis (between 2 types of securties)