Euro Credit Supply: Summer slowdown

EUR corporate supply slows down in July

• Corporate supply in July aligns with expectations, decreasing to €12bn. The monthly levels closely resemble those of July last year but levels remain significantly higher from a YTD perspective. Supply has been consistently robust since January, totalling nearly €249bn YTD. We expect supply will slow down in 2H and forecast no more than €80-100bn of supply remaining.

• On a YTD basis, the Auto, Industrials & Chemicals and Utility sectors have driven supply, accounting for half of the total supply, with each sector close to €40bn. Supply remains notably low this year for Oil & Gas, totalling only €2bn YTD, representing a 70% decrease compared to last year’s figures.

Banks have focused further down the liability structure in supply YTD

• EUR Financials supply in July reached €21bn, setting record levels for the month since 2020. YTD supply touched €224bn, confirming robust activity for Financials this year.

• Bank Capital, Insurance and Financial Services are driving the 2024 YTD supply. These sectors have seen a remarkable increase of over 50% compared to last year. Despite a slight drop in July, their strong presence in Financials debt issuance remains evident.

• The covered bond market saw a significant supply decrease in July compared to the previous month, with only €6bn of covered instruments issued. The YTD covered bond supply totals €122bn, marking a 19% decrease from 2023 figures.

• In the bank senior segment, July’s supply reached €13bn. This includes €8bn of preferred senior instruments and €5bn of bail-in senior debt. Overall, YTD bank senior debt decreased by 14% from last year, moving from €157bn to a total of €136bn. Banks have been focusing further down the liability structure in order to get the riskier deals done while there are favourable market conditions.