Euro Credit Supply: Expect €330bn in year-end corporate supply     

Corporate supply in September lower than previous years  

Corporate supply amounted to a decent €43bn in September. This is notably lower than the €50bn seen in September last year and the €58bn seen in September 2019. Supply is now sitting at €270bn on a year-to-date basis, €100bn lower than the €386bn supplied by this time last year and the €305bn supplied in 2019 YTD. We expect supply will be more in line with last year for the coming three months, resulting in year-end supply to total up to €340bn. We are forecasting supply to reach up to 30bn in October and November, and around €10bn in December. 

Redemptions were €20bn in September, resulting in a net supply of €23bn. Net supply is now sitting at €106bn YTD, of which the ECB has purchased the majority of. Redemptions are set to be another €50bn over the coming three months. Therefore, we expect net supply to total between €105-115bn at the end of the year. This is substantially lower than previous years and is likely to be the lowest on record since 2014. Naturally this is a significant factor in the strong technical picture we are seeing in credit keeping spreads tight and supported.

The utility sector saw the most supply in September, pencilling in €9bn, followed by €8bn supply in both consumers and industrials. Utilities are also leading in terms of YTD supply with €56bn. Naturally this is lower than last year’s YTD figure of €82bn but it is still a sizeable amount and running ahead of other previous years. Utilities normally contributes 21% towards total supply. Real estate supply pencilled in another €5bn in September, now totalling a record breaking €50bn on a YTD basis. Real estate supply has already well exceeded previous full year totals. Despite this, real estate supply has still been met with decent demand.  

Large financials and covered bond supply in September

Substantial financial supply in September amounting to €35bn. This is the highest monthly supply since January 2020 and notably more than the average €25bn normally seen in September. On a YTD basis, financial supply is now at €206bn, ahead of most previous years. Redemptions were high in September totalling €26bn. Therefore, net supply increased by just €8bn, to amount to €72bn thus far this year.

Covered bonds also saw an increase in supply in September, pencilling in €21bn. This is also the highest on record since January 2020. Covered bond supply on a YTD basis is now at €77bn, running behind the YTD figure of €89bn from last year.

Bank senior saw €19bn in supply in September, most of which was preferred, meanwhile, bank capital supply was €5bn. Bank senior supply is now sitting perfectly aligned with last year on a YTD basis with €116bn.