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 issuance drew a blank in the last week, which is understandable given that the only deal in plain vanilla investment grade markets was that from Illinois Tool Works. The month’s transactions though were decent at €11.75bn and for the full-year we’re up at €73bn. It’s tempting to extrapolate and think we might get somewhere in the order of €150bn for the full-year, but issuance tends to slow from now and the trajectory suggests we’re looking at €120bn – €130bn for the full-year.