Euro Credit Supply: Notable jump in November

The large jump in supply last month came as rates fell and cheaper funding became available. Some of this has also been pre-funded from next year, taking some pressure off 2024. Despite supply growth, net supply remains moderate, at €60bn, due to the YTD redemption volume of €246bn.

Industrials & Chemicals lead the corporate sectors in supply, as this accounts for €56bn in YTD supply. Meanwhile, the Consumer and Auto sectors are also witnessing a rise in supply, standing at €49bn and €50bn YTD, respectively. This is a €24bn increase for both sectors compared to the same time last year. However, Real Estate continues to lag behind, not only in supply, which stands at €7bn, but also in comparison to last year, having considerably decreased from last year’s €24bn YTD.

YTD corporate Reverse Yankee supply is now at €40bn. Due to USD corporate spread outperformance versus EUR, the equation for many corporates shows no cost saving advantage. Nevertheless, November saw a notable increase of Corporate Reverse Yankee supply, by around €7bn.

Financial institutions supply reached €28bn in November, bringing the 2023 YTD supply to €312bn, some €24bn ahead of the 2022 YTD total. Net supply rose to €13bn in November.

Bank bond supply reached €24bn in November, nearly doubling the total printed in October. Issuance was split with €22bn of Senior bonds (perfectly split with €11bn in preferred and €11bn in bail-in seniors) and €2bn in subordinated debt.

Covered bond supply rose to €11.5bn last month, that is well behind the €17bn issued in November 2022. Issuance was led by Germany with €3bn printed. The total EUR covered bond issuance reached €188bn, which still remains €20bn behind the 2022 YTD supply. We expect covered bond supply to decline in 2024 with total issuance of €180bn.