US Dollar Credit Supply: Large corporate supply in March

Considerable corporate supply during March 

Corporate supply amounted to a substantial US$133bn in March. This is the largest month of supply since May 2020. This has pushed supply on a YTD basis up to US$239bn, ahead of all previous years with the exception of last year. Redemptions in March amounted to US$57bn, marking the highest month for redemptions this year. Nonetheless, net supply still amounted to a notable €72bn. Redemptions drop to US$38bn in April, therefore we expect to see slightly less supply in April relative to March.

As we had anticipated, over US$200bn had been supplied in quarter one. We expected to see heavier supply come in the first half of the year relative to the second. We forecast around US$225bn to be supplied in quarter 2. From there, we expect just less than US$200bn in quarter 3 and closer to US$150bn in quarter 4.

Utility and particularly TMT were the largest suppliers in terms of sectors in March, with US$28bn and a substantial US$61bn respectively. TMT supply is now sitting at US$103bn on a YTD basis, nearly double that of last year’s US$59bn. Consumers on the other hand are sitting at just US$16bn YTD, down significantly compared to the US$75bn supplied by the same time last year.

Corporate Reverse Yankee supply totalled €11bn in March, now sitting at €18bn YTD. This is indeed low compared to the €28bn and €27bn of 2020 and 2019 YTD figures, respectively. However, this is largely due to the low amount of Reverse Yankee supply in the first two months of the year. We expect Reverse Yankee supply to increase in the coming months and total at least €80bn by the end of 2021.

Financial supply YTD running ahead of previous years bar last year

March pencilled in US$56bn in financial supply. This is an increase on totals from previous Marchs, with the exception of last year. Redemptions amounted to US$35bn in March, leading to a net supply figure of US$21bn. This is the largest net supply seen thus far this year. Redemptions increase up to US$43bn in April, suggesting we may see a slightly busier month than normal. Apart from last year, April tends to be a quiet month for supply with generally very low net supply figures.

Interestingly, Bank senior preferred was the most supplied senior debt with US$18bn in March. On a YTD basis, on the other hand, Bank senior bail-in has increased notably compared to last year with US$19bn vs US$13bn, respectively. Moreover, Bank capital has seen an increase in supply from US$19bn in 2020 up to US$30bn in 2021, on a YTD basis.