Euro Credit Supply: Primary markets reopen early

EUR corporate supply in August hits record high

• Primary markets opened early this year, with supply building during the last week of August. As a result, record-breaking supply has been pencilled in for August with corporate supply at €29.5bn. YTD supply has jumped to €281bn, still far ahead of previous years.
• The Autos sector led the way in August with €6bn issued, followed by Industrials & Chemicals and Utilities, each with €5bn. These three sectors also dominate YTD supply figures. The Healthcare sector’s YTD supply amounts to €28bn, significantly above the €8bn for the same period last year.
• Supply continues to be concentrated slightly longer on the curve, despite the larger demand and attraction seen in the shorter end to belly of the curve. Deals with shorter maturities tend to face larger demand, as seen in the secondary market and via the concentration of fund flows in shorter dated debt.
• Reverse Yankee supply totalled just under €3bn in August, with YTD supply now at just over €51bn. USD spreads are trading notably wider than they were during the first half of the year relative to EUR spreads, despite more of a retracement in USD seen in recent weeks. This larger differential does open up some cost saving opportunities for US issuers, particularly in longer dated bonds. As such we may see more Reverse Yankee deals coming to the market in the coming weeks.

EUR financial supply drops in August

• In August, the overall EUR financial supply reached €19.8bn, the lowest monthly level since the start of the year, bringing the YTD total to just over €245bn. Despite the slight drop, levels remained relatively consistent with post-Covid August figures of previous years.
• With YTD covered bond supply reaching €134bn, EUR covered debt saw an increase from €7bn in July to €11bn in August, still below the €15bn issued in August 2023.
• The supply of EUR senior unsecured bonds totalled €10bn, down €4bn vs July. Issuance was predominantly driven by preferred senior debt at €8bn, with the remaining €2bn in bail-in bonds.