Corporate supply: a return to €444bn
The desk interprets recent commentary suggesting a decline in corporate supply towards €444bn in 2027 as a pivotal shift in the credit landscape. Per the full note from ING, corporate issuance is expected to decrease from a record €485bn in 2026, influenced by higher rates, wider spreads, and general market volatility. This marks a significant change, with the anticipated decline offering a more supportive technical backdrop for credit spreads. As institutional traders navigate this evolving environment, new positioning will be crucial amid the expected tightness in supply.
What the desk is arguing
The desk views the forecasted drop in corporate supply back to €444bn in 2027 as indicative of tightening credit conditions. Per the full note from ING, elevated corporate issuance levels seen in 2026 are expected to ease as factors such as hyperscaler fatigue and rising debt costs weigh on the market.
ING estimates that corporate supply will decrease by approximately 8.5% from the record highs of 2026, reflecting an adjustment in market dynamics. Notably, redemptions are set to rise to €318bn, which, combined with a reduction in new issues, will contribute to a calculated net supply of just €126bn. This transition suggests a bullish case for credit spreads and marks the first expected decline in net supply in several years.
Where it sits in our coverage
With respect to credit spreads, our consensus target for 2027 is a modestly tighter environment amidst these dynamics. The current consensus estimates vary, with jpmorgan projecting a target of 1.10 for Euro-denominated bonds, while bofa is more conservative at 1.04.
This reflects a divergence within the market outlook, with jpmorgan firmly aligned with the bullish narrative stemming from ING's analysis, while bofa remains wary of potential headwinds affecting corporate credit quality.
How other firms see it
Overall, firms like jpmorgan see the drop in corporate supply as supportive for credit spreads, while firms like bofa express caution due to concerns about softness in corporate earnings and potential market volatility ahead. Their differing positions illustrate the uncertainty inherent in the upcoming months.
Investors should monitor related indicators such as the ECB's interest rate decisions and economic growth forecasts, which will significantly influence market sentiment and credit conditions moving forward.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Corporate supply is expected to decline to €444bn in 2027, a significant drop from 2026's record €485bn.
- 02Higher debt costs and market volatility are anticipated to result in net supply being limited to €126bn.
- 03This situation marks the first expected reduction in net supply in several years, potentially providing support for tighter credit spreads.
- 04The market outlook is mixed, with some firms bullish on credit spreads and others expressing caution.
Market implications
Traders should watch for movements in spreads as supply tightens, particularly around the key target of €444bn in 2027. The upcoming ECB meetings could also provide critical insights into monetary policy that affects corporate borrowing costs.
Risks to this view
The primary risk to this outlook would arise from unexpected shifts in monetary policy or robust economic data, which could force rates higher and dampen demand for corporate bonds, thus increasing issuance levels contrary to expectations.
Articles Corporate supply: a return to €444bn Published 10:18 Credit Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Higher rates, wider spreads, steeper curves, hyperscaler fatigue and a more volatile backdrop should see corporate supply ease modestly from record highs. We forecast €444bn of supply in 2027 Timothy Rahill and Jeroen van den Broek We expect corporate supply to fall back to €444bn in 2027, around 8.5% lower than 2026's record level It's all the 4s... again 2026 is set to be a record year for euro supply at €485bn. Elevated redemptions, capex, M&A, ALM activity, hybrid issuance and, of course, the heavy reverse Yankee supply, particularly from US tech issuers, have all supported issuance volumes.
Looking to 2027, many of these drivers remain in place, but higher rates, slightly wider spreads, steeper curves, hyperscaler fatigue and a more volatile backdrop should see supply slow modestly from record highs. As such, we expect supply to fall back to €444bn in 2027, approximately 8.5% lower than 2026's record level. That would bring issuance back in line with the €444bn seen in 2020 and close to the €455bn printed in 2025.
More importantly, it would mark the first decline in net supply in several years, providing a more supportive technical backdrop for credit spreads. Net supply is pencilled in at €126bn after redemptions rise up to €318bn. Corporate supply to fall to €444bn Source: ING, Dealogic "> Source: ING, Dealogic Higher rates, higher cost of debt All-in yields in EUR IG credit have risen back towards 4.5%, driven largely by higher underlying rates rather than wider credit spreads.
Looking ahead, our rates strategists expect a modest steepening bias in 2027, with slightly more downward momentum at the front end of the curve. The broader message, however, is that rates should remain elevated enough to keep all-in yields attractive. We expect only limited changes in outright rates, curve shape and swap spreads, leaving all-in yields broadly intact.
As a result, the search for yield should remain a powerful tailwind for credit markets throughout 2027, although the same elevated rates continue to increase the cost of debt for issuers. All-in yield for credit rises Source: ING, IHS Markit "> Source: ING, IHS Markit Capex and M&A are on the rise Utilities capex will remain a key driver of issuance, with the sector set for another heavy funding year as we forecast around €75bn of supply in 2027. M&A activity should also continue to support primary market volumes.
While technology has grabbed the headlines, M&A outside the sector has also accelerated, with both US and European deal activity reaching new highs in 2026. The pipeline remains healthy, suggesting momentum should carry into at least the first half of 2027. However, higher rates, rising debt costs and somewhat tighter liquidity conditions are likely to become a greater constraint over time.
As a result, we expect M&A-related issuance to remain supportive of supply, albeit at a more moderate pace as the year progresses. M&A activity reaching new highs Source: ING "> Source: ING It's all about utilities and TMT Across sectors, issuance should broadly converge towards redemption needs. Utilities and TMT are the key exceptions, where funding requirements remain elevated amid energy-transition investment and continued tech issuance.
Read more on these two sectors and the influence from Corporate Hybrids and Reverse Yankee issuance later in this report. Supply per sector shows it’s all utilities and TMT Source: ING, Dealogic "> Source: ING, Dealogic Credit Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Timothy Rahill Credit Strategist Timothy Rahill is a credit strategist at ING Bank in Amsterdam. He joined the Bank straight out of University in 2019, after relocating to the Netherlands from Dublin. He graduated from Technical… Jeroen van den Broek Global Head of Sector Research Jeroen is Global Head of Sector Research, based in Amsterdam.
He started working for ING Financial Markets in 2001. His main focus is investment grade credit strategy with a particular focus on… In this article It's all the 4s... again Higher rates, higher cost of debt Capex and M&A are on the rise It's all about utilities and TMT
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