Euro Credit Supply: November saw a large window for issuance

Corporate supply now sitting at €255bn YTD

Corporate supply amounted to €30bn in November, a €7bn increase on September’s figure. Rates stability and spread tightening offered a decent window for issuers to hit the market Supply is now at €255bn on a YTD basis, higher than previously anticipated. We don’t expect much more supply to come in December, as primary markets have already began to close.

TMT and Autos issued the most in November, at €8bn and €7bn respectively. On a YTD basis, Utilities have supplied the most this year, totalling €57bn and up marginally from last year. Most other sectors are down compared to last year, but none more than Real Estate - falling from €59bn to €24bn. In 2023, we expect lower Real Estate supply again, as well as lower Oil & Gas supply. All other sectors should see a small increase next year as we expect a small increase in supply overall in 2023. We are forecasting a 10% increase, totalling €275bn. This is still well below the historical average. Redemptions are up in 2023, pencilled in at €246bn, the highest year on record.

Corporate hybrid supply amounted to €2bn in November, pushing YTD supply up to €12bn, down 68% on last year’s €36bn. We forecast just €15bn for corporate hybrids next year. We expect rather low supply due to the massive change in the arithmetic for the attraction of hybrid capital. Naturgy, Engie and Heimstaden have shown that calls or tenders can be done with no effect on supply, so calls due in the next 18 months becomes a less effective input. We expect all-in funding levels to drop in 2023 and as such that could add some refinancing opportunities. We estimate supply at just €15bn.

Substantial financial supply in November leads to €280bn YTD supply

Financials supply amounted to €42bn in November, the highest figure of this year. Banks senior supply accounted for €30bn of last month’s supply. Bank capital supply was €7bn.

Financial supply is now at €280bn YTD, still notably ahead of previous years. Bank senior has supplied €194bn on this, up 34% YoY. Bank capital is at €27bn YTD, behind last year’s €39bn. Financial services and insurance supply are also down relative to last year at €38bn and €20bn respectively.