US Dollar Credit Supply: Corporate supply remains strong

Increase in supply in May, leaving YTD supply at US$416bn

Corporate supply totalled US$74.4bn in May, up on the previous month’s US$48bn. However, it was lower relative to May 2023 (US$124bn). YTD supply has now reached US$416bn, still running slightly ahead of last year. We could see supply slow in the second half of the year as elections and other geopolitical and economic factors leave some uncertainty.

Utilities (US$17bn), Consumers (US$13bn) and Industrials (US$12bn) are driving this month’s supply. Utilities also drives 2024 YTD supply alongside Healthcare, with both seeing US$80bn of supply. Consumer and TMT have the lowest YTD supply compared to last year with 30% and 25% decreases respectively.

There has been a significant increase in Reverse Yankee supply in May, with €21bn coming to the market. YTD supply now sits at €44bn. The new deals from the US issuers look slightly more attractive, with a little bit more NIP on offer. The cost saving equation for US issuers to issue in EUR and swap back to USD is not that advantageous at the moment in the five-year area, while there is some cost saving longer out the curve.

Slightly slow financial supply in May, but still running ahead of previous years

Financial supply remains mainly constant in respect to the previous month, landing at US$47.5bn, again a relatively low month compared to previous months. However, on a YTD basis supply stands at US$303bn, still running ahead of previous years.

Bank Senior also has a low issuance levels compared to previous months, with US$21bn coming to the market. YTD supply, however, is up on last year with Bank supply 65% higher than 2023 YTD.

AT1 supply was US$4bn in May, pushing YTD supply up to US$17bn, versus US$10bn in T2 supply thus far this year.