Euro Credit Supply: Supply continues at a strong pace
At a Glance
The desk interprets the strong demand for Euro credit supply as indicative of a resilient corporate sector, despite a slight decrease in issuance from May. Per the full note source, June saw corporate issuance of €51bn, which, although lower than May's €68bn, is still well above historical averages and brings year-to-date totals to €289bn. This momentum suggests a robust backdrop for Euro denominated assets, particularly as ESG issuances remain a focal point and hybrid debt begins to gain traction. Current trading indicates a mix of stability and the potential for upward pressure on the Euro if these trends persist into the second half of the year.
Key Takeaways
- 01June corporate issuance of €51bn shows resilience despite a decline from May's numbers.
- 02ESG bond issuance reached a monthly peak of €18bn, indicating a strong sustainable finance trend.
- 03Year-to-date totals for Euro credit issuance (€289bn) outpace 2022 figures significantly.
- 04Continued hybrid issuance suggests a developing preference for innovative financing structures.
Full Analysis
What the desk is arguing
The desk frames the current Euro credit supply landscape as a strong signal of corporate health, citing June's issuance figures. According to the report, June's €51bn issuance continues to reflect a sturdy economic backdrop, with year-to-date totals significantly outpacing last year's figures.
Particularly notable is the €18bn in ESG issuances, marking a new peak for 2023. This aligns with the ongoing trend of increased focus on sustainable finance, accounting for a record total of €64bn year-to-date, further solidifying the Euro credit market's potential within broader financial strategies.
Where it sits in our coverage
Our consensus target for EUR/USD is 1.075, with a range ceiling of 1.12 and a support level at 1.04. Key firms with specific targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This view aligns with jpmorgan, sitting slightly above their projections, while contrasting with bofa's more cautious stance, which could influence market movement in the coming months.
How other firms see it
Firms like jpmorgan and others share an optimistic outlook on Euro credit, aligning with the positive sentiment emerging from the latest issuance data. Conversely, bofa takes a more conservative approach, leaning towards caution in their forecasts.
Key areas to monitor include the potential effect of rising ESG issuance on overall Euro stability and the dynamics between EUR/USD and broader risk sentiment in global markets, especially tied to corporate health indicators.
Market Implications
Traders should watch for EUR/USD movement particularly in response to upcoming issuance trends, as sustained high levels could bolster the Euro. A break above 1.075 may indicate strengthened investor confidence in Euro credit markets.
From the original
Reports Report Euro Credit Supply: Supply continues at a strong pace 15:56 Credit Supply continues running with a heavy June Timothy Rahill and Marine Leleux Download PDF Executive summary June corporate supply remains strong Corporate supply was still very active in June, with &
Related speeches
4 itemsUS Dollar Credit Supply: Supply continues at a strong pace
The desk argues that the elevated levels of US dollar credit supply could suggest ongoing liquidity and a supportive environment for USD-denominated assets. Per the full note by Rahill and Leleux, corporate supply hit $110 billion in June, nearly doubling the issuance from the same month last year and bringing the year-to-date total to $685 billion. This robust issuance is significantly ahead of previous years, indicating strong demand and providing confidence for continued issuance as companies prepare for capital expenditures.