A small increase is expected for corporate supply in 2024
Corporate bidding amounted to €31 billion in September, a decent bidding month but overall still relatively low compared to previous years. We continue to expect supply to slow down in the coming months. Year-to-date corporate performance now stands at €256 billion, up from €202 billion at this time last year. We predict that the supply will approach 300 billion euros by the end of the year. For next year, we expect supply to see an increase over this year, but overall supply will remain manageable and below the record years of 2019 and 2020. Next year’s increase will be driven by an increase in refunds , of 246 billion euros. to 260,000 million euros. Therefore, we do not expect net supply to see a material change next year.
In terms of sector breakdown, automotive remains the leading supply sector, accounting for €47 billion in total supply to date. This is a notable increase of €27 billion compared to the same period last year. We also note that the industrial and public services sectors are following closely, with each issuance of €44 billion to date. However, the real estate sector is far behind, at €6 billion, compared to €23 billion last year to date.
Reverse Yankee’s corporate supply to date now stands at €33 billion. We forecast up to 45 billion euros for the year. We expect relatively sluggish supply in the coming months, especially now that the equation for a cost savings advantage is becoming less favorable for US companies as dollar differentials have overtaken the euro. We see value in Reverse Yankee bonds when they come to market, as they generally offer an attractive new issue premium.
The financial offer and the offer of guaranteed bonds remain ahead of previous years
Supply from financial institutions reached €35 billion in September, bringing the total supply to date to €267 billion, which is €42.5 billion more than the total to date in 2022. We expect the October supply remains important, although potentially lower than what we have seen in September. Redemptions last month amounted to €21 billion, resulting in a positive net supply of €13.5 billion.
September bank bond supply reached €25 billion, a significant increase compared to August levels. The issues were divided into €23 billion in senior bonds (with €14 billion in senior preferred bonds and €9 billion in senior bail-in bonds) and €2 billion in subordinated debt.
The supply of covered bonds has been historically low in September: only 7 billion euros were printed. This represents 14 billion euros less than the September 2022 offer. This is explained by the worse general state of the market, together with issuers waiting for the announcement of the ECB’s interest rate rise to bring new issues to the market. . Overall, covered bond supply remains €6 billion ahead of 2022 year-to-date, with €167 billion printed in 2023 year-to-date.