US Dollar Credit Supply: September supply surge

Record-breaking corporate supply in September

• Supply reached a very substantial US$119bn in September, significantly larger than in previous years. This is the 2^nd largest supply recorded this year, after March. TMT and Utilities were the large drivers of supply last month, at US$41bn and US$31bn respectively. Both sectors are up compared to last year on a YTD basis, at US$148bn (up 28%) and US$136bn (up 5%) respectively. Overall YTD supply amounts US$689bn - while this is trailing last year’s US$721bn, it is up on most other previous years.

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 would be the second-highest year for Reverse Yankee supply on record, after the €98bn of 2019. Opportunistic funding is likely to be the large driver for the increase in supply. Additionally, redemptions for Reverse Yankee bonds rise in 2025 to €47bn, an increase from €39bn maturing in 2024.

Pickup in financial issuances in September

• After a quiet August, financial supply picked up again in September, reaching its highest level since May for banks. Indeed, bank issuances reached over $36bn, split between over $28bn in senior unsecured bonds and $8.5bn in capital instruments.
• This brings the 2025 YTD total to nearly €260bn for the senior unsecured segment, a $23bn increase compared to the 2024 YTD level. Less increase is noted on the bank capital side as we record $61bn printed so far this year, up only $1bn compared to last year’s levels.
• We expect the financials primary market to remain active this month. However, redemptions are set to drop in all segments with the biggest differential being for bank capital.