Euro Credit Supply: Summer lull shapes corporates and banks’ July supply
The slowdown in Euro credit supply during July reflects the traditional summer lull, which manifested in a significant drop to €17 billion in issuance from €52 billion in June, highlighting sector disparities with utilities and TMT leading growth. Per the full note source, while net supply remained steady with redemptions balancing new issues, tight spreads contributed to robust primary demand with year-to-date issuance at €308 billion, 11% ahead of last year. This environment could pose implications for EUR liquidity, especially if the momentum in corporate issuance does not accelerate post-summer.
What the desk is arguing
The recent report indicates that Euro corporate supply contracted significantly in July, primarily due to the seasonal slowdown typical of this period. Notably, the issuance dropped from €52 billion in June to just €17 billion, with utilities and technology, media, and telecom (TMT) sectors emerging as the primary sources of July issuance, contributing a combined €9.2 billion. This creates a contrasting dynamic as sectors like healthcare and autos saw no new issuance, indicating sector-specific pressures.
Strong demand in the primary market has been supported by tight credit spreads and rising all-in yields, which helped boost year-to-date issuance to €308 billion, marking an 11% increase over the same period last year. The data reveals that utilities and TMT sectors are significantly outperforming others, with year-on-year growth rates of 45% and 31%, respectively, reinforcing their role as critical growth engines within the euro credit landscape.
How other firms see it
Firms generally align with the sentiment that substantial summer lulls in corporate issuance can create volatility in credit spreads and liquidity. However, contrary views suggest potential overheating in credit valuations particularly in the TMT and utilities sectors, cautioning that such dynamics could reverse unexpectedly as macroeconomic conditions evolve.
Looking ahead, the performance of the EUR/USD may be particularly sensitive to evolving credit supply dynamics and could reflect the broader health of the Eurozone economy, with potential insights from central bank signals and equity market performance.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01July Euro corporate issuance fell sharply to €17 billion due to the summer lull.
- 02Utilities and TMT sectors dominated issuance, together accounting for 45% of YTD supply.
- 03Strong demand continues for primary credit despite overall issuance slowdown.
- 04Year-to-date issuance remains robust, outpacing last year's figures by 11%.
Market implications
Traders should closely monitor issuance levels and spread changes in the wake of the seasonal slowdown, particularly in the utilities and TMT sectors, as any further tightening in credit conditions could influence the EUR liquidity landscape. A significant shift in issuance patterns could set the stage for volatility in the EUR/USD, especially if macroeconomic indicators deviate from current expectations.
Risks to this view
A potential reversal in the call could occur if euro credit supply unexpectedly rebounds post-summer, driven by heightened corporate refinancing or capital expenditure, impacting market liquidity. Additionally, if central banks signal a departure from their current monetary stance, this could lead to increased corporate borrowing costs and dampen issuance.
Reports Report Euro Credit Supply: Summer lull shapes corporates and banks’ July supply Published 07:30 Credit Corporate and financial supply slowed in July because of the summer lull. Utilities and TMT remain the main growth engines for corporate supply Timothy Rahill and Marine Leleux Download PDF Executive summary Corporate Supply slows into the summer lull Corporate supply slowed to €17bn in July, from €52bn in June and €23bn in July 2025, reflecting the summer lull. Tight spreads and a 20-25bp rise in all-in yields supported demand overall within credit resulting in continued strong demand in primary.
YTD issuance reached €308bn, 11% ahead of last year and second only to 2020. Redemptions of €17.7bn left July net supply at-€0.7bn and YTD net supply at €117bn. Utilities (€5.1bn) and TMT (€4.1bn) dominated July and account for 45% of YTD supply.
They remain the main sector growth engines, up 45% and 31% YoY, supported by capex, particularly in TMT. Healthcare lags at -55%, while Autos and Oil & Gas saw no July issuance. Corporate hybrids paused in July but remain a key YTD driver at €36.1bn, almost double last year’s €18.8bn and near the €37.5bn issued in full-year 2025.
Refinancing, capex, tight hybrid spreads, M&A and rating defence should support further activity. The 3-6yr bucket dominated with €8.1bn, almost half of July supply, while €3.7bn was printed beyond 12 years. Reverse Yankees added €5.2bn, taking YTD supply to €74.1bn, and remain a major driver despite the EUR cost advantage becoming more issuer- and maturity-dependent as USD spreads tightened.
ESG issuance added €6.7bn, lifting YTD supply to €71bn, 46% above last year. The summer also impacts banks’ activity on the primary market The bank bond supply dropped in all segments of the liability structure in July with a total of €11.6bn printed, down from over €52bn in June. The bulk of last month’s supply stands in the senior non-preferred segment with €6.5bn printed while another €3.5bn was issued as senior preferred instruments.
The most significant MoM issuance drop stems from the covered bond segment where we record only €1bn supplied by a German name. This a decade low for covered bond issuances in July, even below July 2020, during the global pandemic. Despite the significant dip, covered bond supply remains well on track to reach our full year estimate of €170bn (of which €165bn in benchmark-size bonds), as it totals €126bn in 2026 YTD, up €17bn YoY.
The senior unsecured bank bond supply is reaching €151bn, split with €52bn in senior preferred and €99bn in senior non-preferred issuances. This represents 65% and 79% of our full year estimates, respectively. The full year completion rate is similar in the bank capital segment with €21bn in Tier 2 instruments and €10bn in AT1 printed in 2026 YTD.
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