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
In the senior bank market, we have had an excellent 2019 and issuance surprised to the upside with €164bn printed, the best year since 2015. Eurozone macro is unlikely going to surprise to the upside by much, while loan growth and investment opportunities will remain sluggish. We believe that issuance for 2020 will remain flattish to the 2019 level, and therefore we look for around €165bn of senior bank issuance in 2020.