Investment boom to keep utilities bond supply elevated
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.
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.
How firms align with this view
Aligned with the desk view
Contrary positioning
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.
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.
Risks to this view
The outlook could be invalidated if there are significant shifts in interest rate expectations from central banks that deter borrowing, or if geopolitical tensions lead to unfavorable market conditions that restrict access to capital for utilities.
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, stubbornly high capital expenditure continues to push companies towards bond markets Suvi Platerink Kosonen We expect high bond supply in 2027 for utilities due to redemptions and high capital expenditures We forecast European utilities to raise €75bn via bond markets in 2027 2027 is likely to be another eventful year for European utilities. Geopolitical uncertainty, volatility in energy markets and significant investment pipelines, together with the associated funding needs, should remain key drivers for the sector going into next year.
We forecast €75bn of total bond supply from investment-grade utilities in 2027, only slightly below the €80bn we have pencilled in for full-year 2026. Net supply also remains firmly positive at €35bn next year, although somewhat below the €44bn in 2026. Utilities bond supply set to stay elevated with high capex and redemptions Realised and forecast euro-denominated bond issuance vs redemptions from investment grade utilities Source: ING, Dealogic "> Source: ING, Dealogic Corporate hybrids remain an important part of the funding mix Utilities have raised €19bn with corporate hybrids so far in 2026, the highest level since 2015.
Hybrid issuance helps protect the credit profiles of these companies as they finance their extensive investment pipelines with debt alongside cash flows. While we expect corporate hybrids to remain an important part of the funding mix of utilities in 2027, the choice between senior and hybrid funding will always reflect market conditions and the relative pricing of the two instrument classes. Utilities hybrid supply at record highs in 2026 Euro-denominated bond issuance from investment grade utilities Source: ING, Dealogic "> Source: ING, Dealogic High capital expenditure drives supply Alongside redemptions, bond supply continues to be driven by large capital expenditure.
We expect combined investment to top €200bn next year for large European utility issuers. German names have the highest investment needs for 2027, up around 30% year-on-year, while Italian, UK, and Dutch names are also among those seeing a clear increase. The energy transition continues to drive significant investment needs, with growing electrification and renewable generation requiring substantial expansion and reinforcement of transmission and distribution grids.
Regulated utilities are particularly impacted by higher grid investments, but integrated utilities are also likely to see higher capital expenditure next year. Higher interest rates may make some companies more selective in their investments. The bulk of these programmes is likely to proceed, however, as the acute investment needs of many network utilities are unlikely to change any time soon.
Potential execution constraints could delay the timing of some capex, but we do not expect this to have a major impact on overall bond supply. Investments to remain at high levels European utilities capital expenditure Source: ING estimates, company data "> Source: ING estimates, company data Utilities supply 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 Author Suvi Platerink Kosonen Head of Corporate Credit Research Suvi Platerink is Head of Corporate Credit Research at ING, based in Amsterdam. Her research coverage focuses on European utility companies. Suvi joined ING in 2014 and has worked in financial… In this article We forecast European utilities to raise €75bn via bond markets in 2027 Corporate hybrids remain an important part of the funding mix High capital expenditure drives supply
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