US Dollar Credit Supply: Supply mostly in line with previous years     

Corporate supply in line with previous years on a YTD basis

Corporate supply totalled US$75bn in September, down marginally from around circa US$95bn seen in the past two years. Supply year to date is now pencilled in at US$580bn. This is naturally significantly lower than last year but is in line with previous years. We expect corporate supply to exceed US$700bn by the year-end. Redemptions amounted to US$51bn in September, resulting in net supply of US$24bn. On a YTD basis, net supply is sitting at US$206bn. With US$108bn redemptions set for the final three months of the year, we expect net supply to end the year just above US$220bn.

Corporate Reverse Yankee supply hit €14bn in September, the largest monthly amount since February 2020. Supply is now at €43bn YTD. There has been some widening of USD spreads in the past couple of weeks, which pushes the USD EUR spreads differential wider. This then does offer a more attractive cost saving advantage for US issuers to supply in EUR. We expect further USD underperformance against EUR spreads in the coming months, which may offer further cost saving advantage for Reverse Yankee issues.

The consumer sector saw the most supply in September, a significant US$21bn, followed by Industrials and TMT with US$13bn. On a YTD basis, TMT and Utilities are the sectors with the highest supply numbers, at US$194bn and US$106bn respectively. These account for 33% and 18% of total supply, respectively. Last year only 23% of total supply was TMT supply, while Utilities was 20%.  

Financial net supply expected to total US$160bn by year-end

Financial supply totalled US$40bn in September. This has pushed YTD supply to reach US$433bn. This is an increase on previous years, except last year which was standing at US$431bn this time. Redemptions were just US$14bn in September, meaning net supply was relatively larger at US$26bn, the highest this year. Net supply is now sitting at US$150bn YTD. Redemptions are set to be US$51bn in the coming three months. We expect to see at least another US$60bn in supply before the end of the year, therefore, net supply is likely to total around US$160bn by the year-end.

Bank Capital amounted to US$12bn supply in September. Bank Capital supply is now running ahead of last year with US$76bn YTD compared to US$53bn last year.