Hybrid supply fades, but will stay elevated
Per the full note from ING's credit desk, corporate hybrid supply is set to fade from record highs but stay elevated, with a €35bn forecast for 2027 that sits well below recent peaks yet remains structurally supported. The argument rests on a refined refinancing calculation: first-call volumes drop to €23bn, but the unrefinanced 1H27 calls cut true 2027 needs to roughly €19bn, before an estimated €6bn of early 2028 refinancing lifts the total to €25bn—with another €10bn layered on from rising utility capex, rating-defence, M&A, and the popular new Moody's 30NC structure. The 30NC format alone accounted for €15bn, or 32% of the €46bn market in 2026, a detail that signals structural, not cyclical, demand. Because this is a credit-supply note with no tracked currency pair, our internal coverage bundle is empty—no consensus target, no firm spread, and no high-impact calendar events in the next 30 days. The desk's call is a slow-fade thesis: supply stays abundant enough to keep spread pressure on hybrids, but the peak is behind us.
What the desk is arguing
ING's credit strategy team frames the 2027 corporate hybrid market as a fade from record highs rather than a collapse, forecasting €35bn of supply that remains comfortably elevated by historical standards. The headline first-call figure of €23bn understates true refinancing need, the desk argues, because some 1H27 calls have yet to be refinanced, pulling the effective 2027 requirement down to about €19bn.
That base is then rebuilt: roughly half of the €19bn in 2028 first calls (€12bn in 1H28) is expected to be refinanced early, adding €6bn to 2027, for a €25bn total refinancing need. The remaining €10bn of the forecast comes from four named drivers—rising utility capex, rating-defence considerations, a still-active M&A backdrop, and the new Moody's 30NC structure.
The counterfactual the desk is implicitly rejecting is a sharper supply cliff. If early refinancing of 2028 calls did not materialise and the 30NC format lost its accounting appeal, the 2027 number would sit closer to the €19-23bn first-call base—materially tighter for hybrid spreads than the €35bn forecast implies.
How other firms see it
The note's structural point is the 30NC Moody's format: because it prices just one notch below the Basic Credit Assessment rather than the usual two, it triggers IFRS debt rather than equity accounting, and that has driven €15bn of issuance, or 32% of the €46bn 2026 market. That accounting quirk is the swing factor between a €35bn year and a sub-€25bn one.
For the macro read-across, watch euro-area investment-grade credit spreads and the utility-sector capex cycle, both of which feed directly into hybrid supply and therefore into the EUR/USD carry picture via broader risk appetite. The European Central Bank's policy path and the euro-area rate curve also matter: lower rates lift refinancing economics and support the early-refinancing assumption baked into the €6bn add-back.
Key takeaways
- 01ING forecasts €35bn of corporate hybrid supply in 2027, below recent peaks but still elevated.
- 02Headline first-call volume of €23bn masks true refinancing need of about €19bn for 2027.
- 03Early refinancing of 1H28 calls adds roughly €6bn, lifting the total refinancing need to €25bn.
- 04Rising utility capex, rating-defence, M&A, and the Moody's 30NC format add a further €10bn.
- 05The 30NC structure drove €15bn of issuance in 2026—32% of the €46bn market—on IFRS debt accounting.
Market implications
Watch euro investment-grade hybrid spreads and the utility-sector capex pipeline for confirmation of the €10bn structural add-on—if 30NC issuance stalls, the €35bn forecast is at risk. The early-refinancing assumption (€6bn from 2028 calls pulled into 2027) is the most fragile input, so track 1H28 call announcements through late 2027 for signs the desk's €25bn refinancing base is fading.
Risks to this view
A sharp rise in euro-area rates would make early refinancing uneconomical, undermining the €6bn add-back and pushing supply toward the €19-23bn first-call base. A regulatory or accounting change to the Moody's 30NC treatment—removing its one-notch rather than two-notch penalty—would strip out the €15bn format that underpins 32% of the 2026 market, invalidating the elevated-supply thesis entirely.
Articles Hybrid supply fades, but will stay elevated Published 10:11 Credit Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Corporate hybrid supply should remain reasonably elevated in 2027, although below recent peaks. We forecast €35bn in corporate hybrid supply next year Timothy Rahill and Jeroen van den Broek Hybrid supply is set to come off its record highs, but remains elevated Corporate hybrid supply should remain reasonably elevated in 2027, although below recent peaks. First call volumes will fall to just €23bn.
However, some hybrid first calls scheduled for 1H27 have yet to be refinanced, implying true refinancing needs are closer to €19bn for 2027. The same goes for 2028, where a good proportion of 1H28 calls will be refinanced in (late) 2027; however, this number is limited in volume as we see a further drop in first calls in 2028 at just €19bn (€12bn in 1H), so we estimate that half of those will be refinanced early, thus adding €6bn to the refinancing need in 2027. This takes the total refinancing need to €25bn.
However, the following should continue to support issuance as in 2026, and we estimate this will add another €10bn. Making up our forecast of €35bn, is: Rising utility capex requirements. Rating-defence considerations.
A still-active M&A backdrop. And the new 30NCs Moody's structure. Hybrid supply vs first-call dates Source: Dealogic "> Source: Dealogic On the hybrid structure front, we remain comfortable with both the methodology and the underlying structures.
The new Moody's 30NC format has also proved popular, accounting for €15bn of issuance in 2026. The fact that the Moody's 30NC structure is just one notch down from the Basic Credit Assessment, rather than the usual two notches, results in IFRS debt accounting rather than IFRS equity accounting. In 2026, issuance in this format reached €15bn, accounting for 32% of the €46bn market, with three issuers managing to attach an investment-grade rating to this format rather than under the traditional boilerplate format.
We are confident that this 30NC structure has helped supply hit its 2026 dizzying heights. The main downside risk to our €35bn forecast is that higher rates continue to raise the cost of hybrid funding, although the headwind is materially less severe than in 2022-23. Combined with slightly wider spreads and a more volatile market backdrop, issuance could moderate further from the above.
Subordinated M&A Issuance 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.
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