Data provided by Dealogic & Credit Market Daily
The bar graphs below illustrate the trend in the growth and trends in corporate bond issuance in the euro-denominated bond market.
i) HY Corporate Bond Issuance Since 2003
We might have had zero issuance in high yield in December and just €1.8bn in November, but we still managed €62bn for the full year in 2018. Coming home on the heels of that record supply in 2017 of €75bn, the year was a good one nevertheless. So as we head into 2019, our view is that we will see just €45bn of deals in the high yield market. That’s back to the pre-ECB QE non-manipulated level. It won’t bring too many problems in a refinancing aspect, because the wall of funding has been pushed back a few years.
MiFID II is HERE
ii) Monthly HY Corporate Bond Issuance
|∑ = 57.12||∑ = 48.55||∑ = 48.98||∑ = 75.02||∑ = 61.99||∑ = 17.04|
|Avg = 4.76||Avg = 4.05||Avg = 4.08||Avg = 6.25||Avg = 5.17||Avg = 1.42|
The poorer level of deal flow, seen pretty much since the end of the first quarter, has continued into 2019 for the high yield market. It’s not great. We’ve had €10.5bn of issuance with March’s €4.8bn the best month for deals since September last year. There has been some concern around economic weakness and all that holds for the high yield market in terms of performance and default rates and the like.
The key takeaway from the last decade has been that low funding rates and investor demand (forced or otherwise) has managed to help borrowers roll over maturing obligations, removed the immediate worries about potential walls of funding and kept the sector ticking over. The bar for all of these variables has risen we would think, but returns of around 5% in the opening quarter will have helped confidence.
For the full-year, we are looking in terms of €40bn tops for issuance though which would be well-down on the range we have seen in the 2014-2018 period (€48bn – €75bn).
For fully searchable individual HY deal data, click here.