US Dollar Credit Supply Update: Financial supply running ahead of previous years

Corporate supply amounts to US$44bn in February, lower than previous years

Corporate supply was lower in February compared to previous years, at US$44bn vs US$76bn last year. Redemptions were US$41bn in February, therefore net supply was very low at just US$3bn. Following a quiet January, YTD supply is running considerably behind previous years at US$79bn, versus US$146bn by this time last year. USD spreads have been pushing wider consistently since November, now on the back of the crisis, spreads are even more volatile. This has put pressure on the primary market, and as such we will likely see lower levels of supply until spreads stabilise. 

We are expecting a drop in USD corporate supply in 2022, forecasting just US$650bn. Similarly, we forecast US corporate supply (in $ and €) to be lower this year at US$630bn, down from the US$685bn seen last year. Redemptions are also expected to drop to US$267, meaning net supply will still be sizeable at US$383bn, much in line with last year’s US$388bn. 

The healthcare sector saw US$12bn supply in February, after US$0bn in January. Utilities saw another US$7bn last month, now sitting at US$16bn YTD, the highest supplying sector thus far this year. The TMT sector has seen US$6bn thus far this year, down from the substantial US$52bn supply YTD last year.     

Financial supply totals

Financials supply amounted to US$33bn in February, up on the average US$25bn seen in years previous. Redemptions were also on the higher end of the monthly average at US$24bn, thus net supply was pencilled in at US$9bn. This comes after a substantial US$85bn supplied in January, pushing the YTD total to US$133bn, the highest level on record.

Bank senior supply is now sitting at US$66bn thus far this year, after US$25bn supplied in February. This is up on the US$53bn senior debt supplied by banks by this time last year. Bank Capital, however, has been rather low, currently pencilled in at US$12bn YTD, running behind the US$25bn in 2021 YTD.