An inflation-driven bifurcation in credits and pricing is to come in a busy Q2, say buyside and sellside sources, as issuers rush to get ahead of biting energy cost rises and weakened consumer demand in the second half of the year.

Lenders could see some inflation-inflected names come in 100 bps above more stable names, according to one syndicate banker, as H2 recession expectations sees lenders turn their back on sectors including Leisure, Retail and Consumer Discretionary. For now, the buyside and sellside alike are keeping keen eyes on the first flock of leveraged loans to land in European Lev loans after a shut down following Russia’s invasion of Ukraine, tussling to work out how pricing should accommodate a rising risk environment.