US Dollar Credit Supply: Strong April supply despite market volatility

Corporate supply remained strong in April, despite widening spreads  

Despite market volatility and widening of credit spreads, USD corporate supply came in at US$44bn in April, mostly on par with previous Aprils. This was, however, a notable step down from the very significant US$132bn registered in March, which had marked the strongest month since February 2024. April redemptions were also significant, reaching US$60bn, keeping net supply negative at US$16bn.

YTD supply now totals US$353bn, slightly trailing the US$370bn recorded by this time in 2024. While lower than last year, this still reflects one of the strongest starts to the year over the past five years.

Reverse Yankee supply will stay strong

USD credit has been the underperformer in the recent market volatility as risks on the US side are perceived to be higher for now. Reverse Yankee supply is set to increase as market conditions increasingly favour cost-saving advantages for US issuers. The increased differential between EUR and USD spreads creates a lower cost of issuance in euro, particularly as the cross-currency basis swap remains at historically very low levels.

Already, we have seen a jump in Reverse Yankee supply, with April levels reaching €21bn, the highest monthly Reverse Yankee supply since May of last year. This is significant considering the very low issuance levels seen overall in April. Therefore, whilst windows were limited, US issuers were ready to act swiftly when the opportunity was presented.

USD financial supply picks up in April

Financial supply rose to nearly US$51.5bn in April, recovering from the US$30.4bn seen in March. This is the highest level since January, bringing the YTD supply just over US$331bn.

In the senior unsecured segment, issuance rebounded sharply to reach nearly US$39bn. A significant increase from the US$12.5bn recorded in March. This is mainly stemming from the senior preferred supply reaching US$36bn, up US$24bn from March’s level. Non-preferred senior issuances also increased in April but to reach US$3.3bn.

In contrast, bank capital issuances remained stable at US$3bn. We also record over US$6.5bn issued in finance and US$3bn in the insurance segment. This brings the YTD financial supply at US$250bn, close to the US$255bn recorded in 2024 YTD.