US Dollar Credit Supply: Substantial credit supply in February

Skyrocketing corporates supply in February pioneered by healthcare

• We saw exceptional supply in February after January’s record levels, as corporates issued US$137bn, up from the US$129bn seen in the same month of last year and setting a new high since 2020. As redemptions amounted to around US$44bn, net supply for the month totalled US$93bn, higher than the US$82bn seen in February 2023. YTD net supply is now at US$137bn.
• Overall, most sectors came with more supply than in January, with autos and real estate being the exceptions as they matched issuance seen in January. The outperformance was led by healthcare, with US$51bn issued in February, almost 40% higher than in February 2023. Consumers and TMT have seen issuance triple with respect to last month, but slightly lower than February 2023.
• Corporate Reverse Yankee supply surprised to the upside with a notable €15bn in February. This comes when the cross currency basis swap offers little to no cost saving advantage due to USD spreads trading very tight relative to EUR spreads.
• With US$5.5bn ESG bonds issued this month only, the US$6.7bn YTD ESG supply is lower only when compared to 2022 levels. On the other hand, Financials ESG supply is scarce so far this year, and at zero in February.

Calmer February on the back of greater supply in January

• Supply slowed in February, although the US$48bn issued established a new high for the month since 2020. Accounting for US$19bn in redemptions, net supply ended in positive territory, totalling US$28bn, and unlike the negative levels of last year.
• Bank supply amounted to US$14.5bn, of which US$6.7bn Preferred and US$7.8bn Bail-In instruments. Issuance was evenly spread across the 0-9yr buckets and also in the 9-12yr and 17yr+ buckets.