Euro Credit Supply: Expect an increase in supply in May

Supply was decent in April despite the earnings blackout and some market turbulence. Much like most previous years, we expect a small increase in supply in May, as earnings season ends. This may add minor strain on secondary market spreads but this should be limited as the demand for new issues has been very strong. We have seen supply well absorbed by the market, with new issues being met with strong oversubscriptions of books and very low new issue premiums. We expect this will continue as there is still a significant amount of cash ready to be put to work in credit; mutual fund flows into EUR IG credit have been substantial, particularly inflows into ETF funds.