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
In the high yield market we think the final total in 2020 will be close to the 2019 total, or even in excess of it, thus possibly seeing a new record. As we closed out 2019, we are just about at the record level of issuance seen for any year since 2017’s €75bn, with €76bn issued. In addition next year, there is a funding wall that needs to be refinanced and might take the 2020 issuance level to between €75bn – €80bn.
There are also going to be higher levels of demand for HY product from ‘IG investors’ frustratingly forced down the curve, squeezed in their market by the ECB’s QE purchases. Macro (as ever) will matter and we will need market volatility to play ball as the market in Europe has a habit of completely closing in periods of stress.
MiFID II is HERE
ii) Monthly HY Corporate Bond Issuance
|∑ = 57.12||∑ = 48.55||∑ = 48.98||∑ = 75.02||∑ = 62.19||∑ = 76.37||∑ = 21.89|
|Avg = 4.76||Avg = 4.05||Avg = 4.08||Avg = 6.25||Avg = 5.18||Avg = 6.36|
The pick of the sectors, from an issuance perspective, has been the high yield market in January. Usually, the high yield market is a very slow starter. Not this year. The month’s volume of over €13bn marked it as the third best in the history of the high yield market in Europe. And it went against the grain completely in the sense that on any other occasion where we have the level of headline risks and associated market volatility, the high market has promptly closed.
This augers well for borrowers. It highlights the high level of investor cash looking for a home in the market. Few are chasing secondary. The ECB is probably back to crowding out investors in the IG market through is QE-related programme. It’s early days, but we will not be betting against a record year for issuance.
For fully searchable individual HY deal data, click here.