30th May, 2025

The European IG corporate market saw a slowdown in supply this week, as expected, with a UK Bank Holiday (Monday) and Ascension Day (Thursday) resulting in a small issuance window.

Given that, Tuesday and Wednesday were the only two days to see any supply for the asset class, although they proved to be busy sessions.

In the end, we saw 10 corporate names make the most of the limited window this week to print a combined 14 tranches worth EUR7.5bn.

Whilst that marked a significant slowdown from the EUR26.2bn to price last week and the EUR27.575bn the week before that, which were the sector’s third and second biggest weeks ever respectively, it was still more than most people expected.

That as we beat the average weekly forecast of EUR4.5bn given in our latest issuance poll, and only just fell short of the highest guesstimate of EUR8bn.

This week’s total was enough to push the monthly total for the sector to EUR66.625bn, which marks the biggest ever, having surpassed the previous EUR61.98bn all-time euro corporate monthly record set in May 2020.

The record total comes after a slow month of April (until the final few sessions anyway) after Trump’s Liberation Day tariff announcements on 2-Apr sent broader markets into a tailspin and put many issuers off going live with bond offerings.

But, with trade tensions thawing in May, especially between the US and China, issuers made the most of what was a wide open issuance window and pent-up investor demand to raise funding at attractive levels on the whole.

Looking at this week’s trades and economic funding was certainly secured by the latest batch of issuers with the average NIC paid up coming in at less than 1bp – 0.83bps to be precise.

That after this week’s names were able to ramp in pricing an average 35.32bps from IPTs to reoffer, on the back of combined demand which finished up at EUR24.5bn and translated into an average cover ratio of 3.49x.

The tight pricing did result in a bit of resistance again from investors, with demand having earlier peaked at EUR32.4bn, but the final combined demand total hardly suggests a big swing in pricing power toward investors from issuers at this stage.

Issuance condensed into Tuesday and Wednesday

Following a supply blank on Monday amid the UK Bank Holiday, the IG corporate bond market got into full swing on Tuesday as six borrowers launched ten tranches, with nine coming in EUR and one as a GBP hybrid.

One of those out Tuesday was National Grid North America which added EUR1.2bn to the recent reverse yankee flurry and put the year-to-date euro issuance from US corporate names at a bumper EUR50.11bn and closer to 2024’s full-year total of EUR61.01bn.

The deal was made up of EUR500m 5yr vanilla and EUR700m (upped from exp EUR500m) 10yr green lines which both landed 35bps inside IPTs on final demand of EUR1.45bn and EUR2.1bn respectively (EUR2.5bn / EUR2.9bn peaks).

Also going with a two-part on the day was Germany’s Amprion GmbH which printed EUR1bn across equally weighted 4.5yr and 11yr green lines.

The 4.5yr line came flat to fair value and the 11yr with a 5bp NIC, with combined demand of EUR3.9bn (EUR4.8bn peak) skewed to the longer line.

Coca-Cola Europacific Partners continued the two-part trend, with EUR500m of 6yr notes (flat to fv, final book of EUR1.9bn versus EUR2.2bn peak) and a EUR300m 2yr FRN (EUR1.8bn orders from EUR2.05bn peak). NICs here were pegged at zero and -2bps respectively.

CCEP added to the previous week’s flurry of floating-rate paper and put the 2025 FRN total at EUR7.05bn – the most any year since 2018 when EUR23.7bn was issued. The bounce in activity comes with the format to be of benefit to issuers if underlying interest rates continue to drop.

Back to Tuesday’s issuance and UK utility British Telecommunications tapped both euros and sterling on the day. The borrower issued a EUR700m long 9yr senior alongside a GBP400m 30.5NC5.5 hybrid.

The EUR notes printed flat to fair value as well, aided by a EUR2.5bn book (peak EUR3.3bn), whilst the sterling hybrid book peaked at GBP1.6bn, settling to GBP1.3bn.

BT was the first IG corporate to offer sterling hybrid paper this year, to follow just three deals worth GBP1.31bn in 2024.

Rounding off Tuesday’s activity we had French duo RCI Banque (EUR500m 5yr green) Mercialys (EUR300m 7yr) whose no grow lines were 3.6x and 5x covered at reoffer respectively.

The former priced with a 5bp NIC after a 35bps move from IPTs to reoffer, whilst the Mercialys sub-benchmark trade saw the biggest spread compression of the week (43bps) to price with a -3bp NIC.

Backing up Tuesday’s flurry, and making the most of the week’s remaining issuance window, four new deals were launched on Wednesday and an existing trade was tapped.

Demand was strong enough as lead managers collated orders towards peak books, although there was some attrition for the more tightly priced lines.

The four new bonds totalled EUR2.85bn. Orders had peaked had EUR10.1bn but settled at EUR7.95bn for a more modest cover of 2.94x.

Among those was a two-part from Mercedes-Benz International Finance B.V with EUR1.15bn sold between a EUR650m 3.25yr and a EUR500m 6.25yr.

Both notes priced flat to fair value at m/s+55 and +90 (IPTs +90-95 and +125-130), but combined orders dropped considerably to EUR2.1bn from an earlier EUR4.3bn peak.

Elsewhere Wednesday, Deutsche Post AG and Glencore Capital Finance both priced with NICs around 5bp.

The former issued a EUR900m 7yr at m/s +83 (IPTs +115 area), with most orders holding firm. The final book was EUR2.45bn, from a peak of EUR2.7bn.

Glencore offered a EUR750m long 6yr (Feb 2032) at m/s +145 (IPTs +180 area) and as with Deutsche Post saw most orders hold. A peak book of EUR2.75bn settled at EUR2.4bn.

HOWOGE Wohnungsbaugesellschaft mbH also priced a EUR200m tap of its Jun 2030 social bond 5bp inside fair value at m/s+110 on a EUR1bn book (EUR1.35bn peak).

Summary of this week's EUR IG corp trades:

ECB meeting to impact issuance window

Looking ahead to next week and there are no major European holidays to interfere with any funding plans (although some Italian names are out Monday), but there is a key ECB verdict due Thursday where a 25bps cut is baked in.

With that distraction, and the latest US Payroll data due Friday, next week’s issuance potential again looks likely to be condensed, with all supply likely between Monday and Wednesday.

Despite that, market participants are expecting another busy run of euro corporate bond sales next week with some thinking as much as EUR10bn could cross the tape.

That would in turn ensure a fast start June, a month that in the last five years has average EUR33.44bn of euro IG corporate paper. Giving that a big boost was the jumbo EUR60.91bn recorded in 2020 as issuers flooded the market amid the Covid-19 pandemic.

Performance tracker of recent EUR IG/split-rated benchmark deals

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