Euro Credit Supply: Primary markets reopen early
Lead — With an increase in euro corporate issuance in August signaling a robust liquidity environment, the primary markets are exhibiting resilience as they reopen earlier than anticipated. Per the full note from ing-think, corporate issuance climbed to €24bn in August, significantly surpassing July's €17bn, reflecting a shift that could influence forex dynamics in the region. This increase aligns with a strong year-to-date issuance of €332bn, presenting a backdrop that may lead to strategic positioning in euro pairs. Therefore, the operational environment in the euro zone may underpin a softer euro, especially if demand for European credits continues to shift considerably during this period.
What the desk is arguing
Corporate issuance in the euro credit market has begun to display a notable uptick, marking an early reopening of primary markets post-summer. In August alone, issuance reached €24bn, an increase from €17bn in July, as noted in ing-think's research commentary. This trend underscores a healthy demand for euro-denominated assets, which could potentially stabilize or strengthen the euro against its major counterparts.
The year-to-date figures are particularly striking, with cumulative issuance now at €332bn—approximately 11% greater than last year and just shy of the €337bn seen in 2020. Such figures suggest increasing confidence within the corporate sector, especially led by the healthcare sector, despite certain industries lagging behind their previous year’s performance. This robust activity might contribute to greater euro liquidity, which can have mixed implications for euro FX pairs.
Where it sits in our coverage
Our current consensus indicates a target price of 1.075 for EUR/USD, with a range between 1.04 and 1.12. Notable firms in our coverage include:
The desk’s stance positions at the upper end of consensus, aligning closely with jpmorgan while diverging from the more conservative outlook of bofa. This suggests additional upside potential in euro pricing as corporate credit demand strengthens.
How other firms see it
There appears to be alignment among firms anticipating euro growth due to increased issuance, particularly among jpmorgan and others projecting upward momentum. Conversely, bofa reflects a more cautious perspective that can create tension in market expectations.
Traders should also monitor the USD/EUR rates closely, as any shifts in U.S. monetary policy stemming from Fed actions can significantly influence the trajectory of euro credit dynamics. A dovish shift in Fed guidance could be particularly favorable for euro valuations in contrast to the dollar.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Corporate issuance in Euro credit markets rose to €24bn in August, indicating market confidence.
- 02Year-to-date issuance now totals €332bn, approximately 11% higher than last year.
- 03Strong performance in healthcare, utilities, and TMT sectors underpins this rise in issuance.
- 04Expect substantial supply continuation, especially from US technology issuers in the Euro market.
Market implications
Traders should watch for any shifts towards greater euro liquidity that could influence the EUR/USD pair. Additionally, with robust supply patterns in the euro credit markets, there may be price adjustments if corporate credits remain attractive for investors, particularly in the wake of US policy changes.
Risks to this view
Any reversal in market sentiment could quickly invalidate this positive outlook for the euro, particularly if US monetary policy shifts towards a more aggressive tightening stance, leading to capital flight from euro assets. Furthermore, unexpected economic data from the Euro region that points to weakness could dampen issuance appetite, pushing rates lower.
Reports Report Euro Credit Supply: Primary markets reopen early Published 10:30 Credit An early reopening of primary markets after the summer slowdown helped lift corporate issuance to €24bn in August, up from €17bn in the previous month and £17bn in August 2025 Timothy Rahill and Marine Leleux Download PDF Strong August supply sets the tone for September Primary markets reopened early this year after the summer lull, with corporate supply rising to €24bn in August, from €17bn in July and €17bn in August 2025. YTD issuance reached €332bn, around 11% ahead of last year and second only to the €337bn recorded in 2020. Net supply turned positive after July, reaching €12bn in August and €128.5bn YTD.
Healthcare led August supply at €7bn, but was still 27% behind last year YTD. Utilities and TMT remain the largest sectors YTD at €63bn and €81bn, respectively, together accounting for over 40% of corporate supply. Corporate hybrid issuance resumed after July’s pause, with €4bn printed in August.
YTD supply reached €40bn, more than double last year’s level at this stage and already above FY2025’s €37.5bn. Recent deals were well absorbed, supported by attractive all-in yields despite tight spreads, with strong oversubscription and low new-issue premiums. Reverse Yankees added €2.6bn in August and another €2bn last week, lifting YTD supply to €79bn.
USD spreads have outperformed in recent weeks, beginning to eliminate the relative cost advantage of euro issuance. The 5yr area has very little to no cost-saving advantage and the 10yr area has, in theory, only 15bp or so at the index level. Given the large Reverse Yankee supply levels and the large size that issuers are bringing, the new bonds are pricing on the wide side with larger NIPs.
Supply should remain substantial, particularly from US technology issuers. Given the larger NIPs, these bonds can look attractive. August bank bond supply picks up, led by the covered segment Bank issuances picked up in August with a total of over €35bn brought to the primary market.
This is a €24bn increase compared to July’s level. The increase is due to the significant rebound in activity in the covered bond segment, with €20.7bn printed last month. This sizeable flow sets the tone for September’s supply and brings YTD issuances to over €146bn.
The rest of the liability structure showed a somewhat more muted return after the summer lull. Indeed, banks’ senior unsecured issuances reached €12bn, up just €2bn from July’s level. This was split into €5bn in senior preferred instruments and another €7bn in senior bail-in bonds (senior non-preferred).
Banks also issued nearly €3bn in subordinated bonds in August (strictly in the Tier 2 format), bringing YTD supply to €33bn. Alongside the overall rebound in banks’ activity in the primary market, we also note €5.5bn printed in ESG format. Despite the MoM increase, that’s still below the €12bn and €10bn recorded in May and June, respectively.
This brings the YTD sustainable issuances to nearly €56.5bn, a comfortable €20bn ahead of the 2025 YTD total. Euro Credit Supply Update 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 Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download
Sources & References
How we cover this story