US Dollar Credit Market: October's Surprising Issuance Trends
The US dollar credit market witnessed a substantial corporate issuance in October, totaling a staggering $98 billion. While this figure is slightly lower than September's $119 billion, it's a remarkable performance compared to previous years, ranking as the third-highest monthly issuance of 2025.
Here's a surprising twist: Despite the overall solid performance, the distribution of maturities reveals a fascinating shift in corporate preferences. October saw a concentration in longer-term commitments, with the 9-12 year and 17+ year ranges dominating the scene. This indicates a strategic move by corporates to secure long-term funding, potentially in anticipation of stable interest rates.
Tech Giants Lead the Reverse Yankee Charge
November kicked off with a bang, as Alphabet announced a six-tranche deal worth €6.5 billion. This trend is part of a broader pattern in 2025, where tech companies are increasingly turning to the EUR market for Reverse Yankee bonds. The allure? Significant cost savings due to tighter and more favorable EUR spreads compared to USD spreads.
But here's where it gets controversial: As of now, Reverse Yankee supply in 2025 has reached €64 billion, and we predict it will hit €80 billion in 2026. This forecast is based on the expected continued underperformance of USD spreads and the cross-currency basis swap remaining low. Tech issuers, with their AI and cloud infrastructure projects, are set to be the primary drivers of this trend, but will they be able to sustain this momentum?
Financial Sector Joins the Party
October also saw a slight uptick in financial supply, with bank senior issuances rising to $36 billion, an $8 billion increase from September. This trend is expected to continue into November, as redemptions remain high. Additionally, the capital segment saw a $5.5 billion issuance, albeit lower than the previous month, but in line with October 2024's figures.
And this is the part most people miss: The finance segment experienced the most dramatic growth, with issuances more than doubling in October compared to September, reaching an impressive $34 billion. This surge highlights the financial sector's growing appetite for credit, potentially signaling increased investment or expansion activities.
In summary, October's credit supply data reveals a nuanced story of corporate and financial sector strategies, with a focus on long-term commitments and strategic cost savings. As we move forward, keep an eye on the tech sector's influence on Reverse Yankee supply and the financial sector's continued growth trajectory.
