US Dollar Credit Supply: Lower corporate supply expected in 2022

Expect corporate supply at US$650bn in 2022, lower than the past couple years

Corporate supply totalled US$720bn in 2021, down of course on the substantial US$1.2tr in 2020, but still sizeable compared to previous years. December was a rather active month for primary markets, with supply pencilling in at US$45bn for the month. This is up considerably on the US$10bn-US$15bn norm for December.

We expect a drop in corporate supply in 2022. We are forecasting USD corporate supply to amount to just US$650bn. Similarly, we forecast US corporate supply (in $ and €) to be lower in 2022 at US$630bn, down from the US$685bn seen last year. The drop is based, similar to European issuance pressures, on the back of factors such as pandemic-related funding needs continuing to subside and high levels of cash on the balance sheet outweighing potential rises in capital expenditure or M&A related issuance.

Reverse Yankee supply totalled €59bn in 2021, down marginally from the €68bn supplied in 2020. This is also on the lower side of the average over the past number of years. We forecast a small drop again in Reverse Yankee supply in 2022, in line with expecting lower supply in general. Historically, Reverse Yankee supply generally accounts for 10% of US corporate supply, which should amount to US$63bn (€55bn). Furthermore, Reverse Yankee supply is on average 19% of Euro corporate supply, which we have forecasted at €290bn. Therefore, we forecast Reverse Yankee supply to hit €55bn in 2022.

Largest financial supply on record, totalling US$563bn in 2021

Last year saw the largest financial supply on record after amounting to a considerable US$563bn. This is up on last year’s record-breaking US$518bn. December pencilled in a decent US$20bn in supply, down marginally from the US$28bn seen in 2020. Although this is still a sizeable amount, and above the US$5bn average of previous years.