Investment boom to keep utilities bond supply elevated
At a Glance
The desk notes that the utilities sector is poised for another year of substantial bond supply driven by elevated capital expenditures and modest redemption levels. Per the full note from ING, European utilities are expected to raise approximately €75 billion via bond markets in 2027, which aligns closely with a projected €80 billion for 2026. This persistent demand for financing is a key theme amid ongoing geopolitical tensions and fluctuating energy market conditions.
Key Takeaways
- 01European utilities are expected to raise €75 billion in new bond supply in 2027.
- 02High capital expenditures continue to drive demand for bond financing in the sector.
- 03Net bond supply will remain positive at €35 billion, albeit lower than previous years.
- 04Corporate hybrids are now a significant component of utilities' funding strategies.
Full Analysis
What the desk is arguing
The utilities sector is set to witness a sustained high level of bond issuance in 2027, supported by ongoing capital expenditures combined with an uptick in redemptions. Per the full note from ING, the anticipated €75 billion bond supply underscores utilities' need to tap into capital markets as they navigate unprecedented funding requirements related to future investments.
This high bond issuance forecast comes even as market dynamics evolve due to broader economic uncertainties, with net supply remaining notably positive at €35 billion for the upcoming year, despite a slight decline compared to 2026's figures. Utility firms thus continue to leverage debt instruments strategically, opting for a mix of corporate hybrids and senior bonds, reflecting their distinctive funding strategies to achieve growth while maintaining creditworthiness.
Where it sits in our coverage
Our consensus target for the EUR/USD pair is 1.075, with a range between 1.04 and 1.12. Notable firms like jpmorgan forecast a target of 1.10 while bofa sees a conservative target of 1.04 for March 2026.
The desk's perspective aligns closely with the 1.075 average but leans toward the higher end of the consensus, especially given the current dynamics surrounding the utilities bond market, which may favor higher yields as a result of increased issuance pressure.
How other firms see it
Firms like jpmorgan are generally supportive of the outlook for utilities bond issuance and align with the desk's view. Conversely, bofa appears bearish, projecting more cautious targets amidst the potential for volatility.
Key currency pairs that may reflect sentiments encompassing this thesis include the EUR/USD trajectory, particularly in relation to upcoming economic indicators that could impact interest rates and liquidity in bond markets.
Market Implications
Traders should monitor the EUR/USD pair closely as it may respond to shifts in bond yields resulting from elevated utilities bond supply. A break above 1.075 could signal stronger support for the euro amid rising investor confidence in the utilities sector.
From the original
Articles Investment boom to keep utilities bond supply elevated Published 10:07 Credit Energy Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download We expect utilities to see another year of high bond supply in 2027. Alongside a modest uptick in redemptions
Related speeches
4 itemsCorporate ESG bond issuance holds firm into 2027
The desk interprets the sustained growth in corporate ESG bond issuance into 2027, with estimates slightly above previous levels, as a positive signal for sustainability-focused investments despite a challenging market backdrop. Per the full note from ING, it is projected that corporate ESG bond supply will reach €72 billion in 2027, up from €70 billion in 2026, driven largely by the utilities sector due to high capital expenditure. This insight aligns with expectations of regulatory support and a broader corporate push towards sustainable financing amid economic uncertainties. With no significant calendar events on the horizon for the next month, traders should remain focused on the structural shifts in bond markets as issuers look to refinance and expand their ESG offerings.
Bank bond supply to stay at cruising altitude in 2027
Per the full note from ING's credit research desk [source], EUR bank bond supply is expected to hold near record levels at €450bn in 2027, with redemptions—not net new funding demand—doing the heavy lifting. Marine Leleux and Jesse Norcross forecast covered bonds at €185bn, senior unsecured at €210bn, and subordinated debt at €55bn, all framed against €400bn of maturities that represent the highest redemption wall in a decade. The critical nuance for FX is that the desk explicitly ties elevated supply to refinancing, not to a macro re-leveraging cycle: the modest growth outlook caps any upside surprise. For EUR/USD, currently 1.1253 against a 1.1600 median December-26 consensus, this is a second-order credit story, but it reinforces the wider 'steady-as-she-goes' European macro backdrop that underpins the mild euro upside in our divergence pillar (see /research/eurusd-ecb-rate-path-2026-10-20). With no high-impact events on the calendar in the next 30 days, the market will lean on supply technicals and the ECB rate path as the marginal drivers.