Euro Credit Supply: Substantial supply in September

Substantial corporate supply in September

• September was a particularly busy month for supply, totalling a substantial €52bn, the highest September figure since 2019. The market is well on its way to reaching our forecast of €400bn in EUR corporate supply for 2025. This forecast, which marks an increase in supply compared to 2024, is driven by higher redemptions, capex, M&A activity and technicals. We currently stand at YTD supply of €347bn. Despite the large supply, new issues continue to be met with very strong demand, as NIPs remains very low and subscription levels are very healthy. Supply should slow in October as we enter the blackout period.

Reverse Yankee supply remains strong

• Reverse Yankee supply remains a strong driver of EUR corporate supply this year, with another €8bn in September. Market conditions remain aligned to offer cost-saving opportunities for US issuers. USD credit has underperformed versus EUR credit this year, resulting in a widening in the USD EUR spread differential. The cross-currency basis swap remains at historically very low levels. We expect this basis to stay anchored at these very low levels of 0-5bp. Thus, the cross-currency basis swap equation will continue to offer a cost-saving advantage for US issuers to come to the EUR market and swap back. This is in addition to US issuers also financing their European operations at a lower yield level.
• We forecast corporate Reverse Yankee supply to reach up to €80bn in 2025, from the current YTD figure of €63bn. This will mark the second-highest year for Reverse Yankee supply on record, after the €98bn of 2019. Opportunistic funding will be the large driver for the increase in supply. Additionally, redemptions for Reverse Yankee bonds in 2025 rise to €47bn, an increase from €39bn maturing in 2024.

Financials supply picked up in nearly all segments in September

• Last month’s total EUR covered bond supply reached over €21bn, up €7bn compared to September 2024. This brings the 2025 YTD total just below €142bn. We expect another €13bn to be issued over the last quarter to reach our full year estimate of €155bn.
• September was also an active month in the senior unsecured segment with €18bn printed. This is split between €12bn in senior bail-in bonds and €6bn in senior preferred instruments. Last month’s supply brings YTD issuances to nearly €111bn and €65bn in the senior non-preferred and senior preferred segments respectively.

While senior unsecured bond issuances are up about 7% compared to the 2024 YTD level, sustainable supply is relatively stable at €40bn. We note a significant increase in sustainable prints in the senior preferred segments, up nine percentage points.