Data provided by Dealogic
The bar graphs below illustrate the trend in the growth and trends in issuance in the euro-denominated corporate bond market.
i) Senior Financials Issuance Since 2003
The all singing, all dancing days of senior issuance pre-financial crisis – are over. Admittedly, back then a fair portion of the supply was front-end in terms of maturity and league table motivated, but we have seen a material decline in senior issuance levels. The banking sector, quite simply, doesn’t need the money.
The difficult macro outlook had made banks more wary of lending but conditions and the outlook are less strained now. Nevertheless, we think we will only see issuance at around the average level established over the past few years, while senior non-proffered deals – as TLAC considerations become firmly entrenched – will be main senior funding structure now on.
MiFID II is HERE
ii) Senior Financials Monthly Supply
Senior financials have had another light year for issuance as those pre-crisis era league table deals remain absent. The deals are now predominately senior non-preferrers in order to meet the new regulatory requirements. As for supply in 2018, we again look for somewhere around the €140bn level for senior financial issuance as banks remain cautious into the improvement we are seeing on the macro front.
The €20bn of issuance in January represents a solid start, but that is usually the case.