The summer ended with a major corporate offer of 19 billion euros that hit the market in the last week of August. This brought the total for August to €22 billion, which was otherwise, as usual, a very quiet month. Redemptions in August amounted to €7.2 billion, bringing the net supply to €15 billion. This added some increasing pressure in recent weeks.
We hope that in September it will ring its usual big offer bell, having already reached 7,000 million euros so far. This could add slight pressure on spreads in the coming weeks. The corporate offering to date now stands at €227 billion. We maintain our view that supply will end the year between €270 billion and €300 billion, as we expect October to December to be relatively slow.
Automobile and industrial continue to be the strongest sectors in terms of supply, and both have a total issuance to date of 41 billion euros. Utility supply has also been decent, with €5.4 billion in August, bringing it to a total supply to date of €40 billion. The real estate sector, on the other hand, has seen very little supply this year, with just €6 billion, compared to the €22 billion seen at this time last year.
Reverse Yankee’s corporate supply to date now stands at €32 billion. We forecast up to 45 billion euros for the year. We expect relatively sluggish supply in the coming months, particularly now that the equation for a cost savings advantage is becoming less favorable for US companies outperforming the dollar spread.