Euro Credit Supply: Another year of hefty EUR supply in 2025

• We forecast an increase in EUR corporate supply in 2025 to €400bn, with greater CAPEX and M&A activity adding to increasing redemptions. This is above the €360bn expected for 2024 and up significantly on the €300bn seen in 2023. This will also make it the heaviest year on record apart from the Covid-19-induced supply rush of 2020. Net supply is therefore also rising - to €124bn, the highest it’s been since 2021. This plays a part in the expected deterioration of technicals. When CSPP redemptions rolling off the curve are taken into account, alongside the inflows expected, we calculate that c.€154bn will need to be absorbed by the market in 2025. In our Credit Supply Outlook 2025: Our forecasts report we outline in detail the 12 reasons why we believe supply will increase in 2025.

• Corporate supply totalled less than €25bn in October, the second-lowest monthly level since the beginning of this year. Overall figures still align with typical October levels of previous years. YTD figures on the other hand remain notably strong, with more than €352bn issued in corporate debt instruments.

• October supply was primarily driven by the Industrials & Chemicals sector with €10bn issued, surpassing last month’s high levels and continuing this year’s trend. Industrials & Chemicals remains the strongest issuer YTD, with a total of €69bn issued in 2024. The Consumer sector also saw robust supply figures, rising by 50% from September to reach €6bn, bringing its YTD total close to €50bn.

• Most sectors however saw weak supply in October. The Utility sector experienced a nearly 75% drop from September, issuing only €3bn. The Auto sector also saw a 75% decline, falling from €4bn to €1bn. The Real Estate sector issued just €1bn, a 83% decrease from the previous month.

We forecast €400bn in EUR bank bond supply in 2025

• Net supply is set to reach over €100bn for financials (including all bank bonds, insurance and financial services) as a whole in 2025. As elaborated on in call 1 of our Credit Supply Outlook 2025, when we take redemptions from CBPP rolling off and inflows expected, the market will need to absorb at least €140bn in 2025. In our EUR bank bond supply piece, we explain in detail why we expect next year’s EUR bank bond supply to stay high but less heavy than in 2024.

• Financial supply reached almost €20bn in October, a 50% decrease on last month but still higher than the average for October last year. YTD numbers for 2024 are remarkable, with a total close to €305bn. With two months remaining in 2024, this could potentially be the strongest yearly supply since 2019, surpassing last year’s €307.8bn.