Thursday, September 7, 2023 9:50 AM EDT
The last week of August set the tone for September, more supply to come! We expect supply in September will be substantial, as is the norm. This may put some pressure on spreads.
Freepik
Executive summary
The summer ended with a substantial €19bn in corporate supply coming to the market in the last week of August. This pushed the August total up to €22bn, which was otherwise, as is the norm, a very quiet month. Redemptions in August totaled €7.2bn, thus net supply amounted to €15bn. This added some widening pressure in the past couple of weeks.
We expect September will ring her usual busy bell of heavy supply, already seeing €7bn thus far. This could add some slight pressure on spreads over the coming weeks. Corporate YTD supply now sits at €227bn. We maintain our view that supply will end the year between €270bn and €300bn, as we expect October through to December will be relatively slow.
Autos and Industrials remain the strongest sectors in terms of supply, both having a total YTD issuance of €41bn. Utility supply has also been decent with €5.4bn in August, bringing it to a total YTD supply of €40bn. The real estate sector, on the other hand, has seen very little supply this year, with just €6bn, compared to €22bn seen this time last year.
YTD corporate Reverse Yankee supply is now sitting at €32bn. We forecast up to €45bn for the year. We expect relatively slow supply over the coming months, particularly now the equation for a cost saving advantage is becoming less favorable for US corporates with USD spread outperformance.
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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
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