Euro Credit Supply: Strong demand for new issues

Active primary markets with high oversubscriptions and low new issue premiums

Another big start to the year with corporate supply reaching €35bn in January. The beginning of the month saw some supply indigestion resulting in a widening of credit spreads, but this has retraced in the last couple of weeks. Demand for new issues was very high, with books well oversubscribed – although this also resulted in rather low new issue premiums. Similarly, the leveraged loan market is also busy and seeing strong demand in primary. As such, the c.30bp increase in cost of debt since the end of November hasn’t deterred any issuance in either the bond market or the loan market.  

Significant senior unsecured supply in January without reaching last year’s level

The supply of senior unsecured instruments reached €35bn last month split with €22bn in senior preferred bonds and another €13bn in senior bail-in prints. Combined, this is €26bn behind what we saw last year at the same period. The most notable difference with January 2023 is in bail-in senior instruments for which we see a decline of €11bn against only €5bn for senior preferred.