Credit
Euro Credit Supply: Expect a slowdown from here
Supply was strong in September, but we expect a slowdown from here
Corporate supply rises in September
- Corporate supply pencilled in €42bn in September, a slight increase on the past two years but in line with most other previous years. YTD corporate supply has reached a substantial €326bn, already surpassing the year-end total levels of some previous years.
- Supply this year has been very much planned and frontloaded, to steer away from the fourth quarter. We expect supply to remain low for the remainder of the year as windows of opportunity are more limited, constrained by earnings blackouts, elections, central bank meetings and economic data releases.
- OATs rose on the back of the announcement of the temporary extra tax on large French companies. French issuers often come up against a cosmetic OAT barrier in pricing their new issues. Any French issuer bringing bonds to the market will need to be sensitive to OATs or risk losing substantial demand in the books. French names with new issues will need to be priced with higher NIPs, and thus at wider levels. This will in turn leave some widening pressure in secondary markets in the medium to long term.
- The Utility sector supply led the way, rising to €10bn in September, up from €5bn in August. It saw a year-to-date (YTD) increase of 35% YoY, to reach €60bn. The Real Estate sector saw a significant jump – to €6bn in September from last month’s €1bn – leading to a 185% YoY increase YTD.
- Healthcare saw a decrease in supply, dropping to €3bn from €4bn in August. Despite this monthly decline, the sector’s YTD total of €31bn still represents a significant 128% increase YoY. The Oil & Gas sector also experienced a reduction, with supply falling to €1bn in September from €2bn in August, resulting in a YTD total of €5bn, 29% lower than last year.
Financial supply reaches record levels in September
- On the financial side, supply touched record levels in September with €39.2bn double the €19.9bn of the previous month. Financial supply reached a YTD total of €286.1bn, approaching the almost €310bn issued in 2023.
- Bank Senior supply reached €24.6bn in September, up substantially from €10.5bn in August. YTD figures show an 11% decrease compared to last year. Bail-in instruments accounted for €12.5bn, well above the €2.3bn of August. Preferred senior supply was €12.1bn in September. Bank Capital supply rose to €5.5bn, a 60% increase YTD.
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This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more