Credit sales in Europe suffer March misery with record slump


(Bloomberg) – The European new bond market suffered the largest first-quarter sales slump on record as credit markets fall out of favor.

Market volume has fallen to less than 46.2 billion euros ($50.8 billion) so far this month, after an average monthly tally of more than 170 billion euros for the first two months of the year, according to data compiled by Bloomberg. It’s the biggest drop in March sales since at least 2014, when the data first started being tracked.

Borrowers remained largely on the sidelines after Russia’s invasion of Ukraine pushed the euro funding costs of the region’s top-rated companies to their highest since the early months of the coronavirus pandemic in 2020. Their credit risk metrics also hit a level not seen in nearly two years last week.

“The prospect of interest rate hikes and the war in Ukraine have clearly reduced risk appetite,” said Barry Donlon, head of EMEA debt capital markets at UBS Investment Bank. “In Europe, we’re finding our bearings and doing it in a very traditional European way: SSAs, then covered bonds, working our way through the liability structure.”

Those who brave the market face an uncertain reception. Rail transport developer Eurofima cited volatile markets on Monday as it postponed a tap offer of existing euro green bonds after setting a final spread on the sale. Germany’s EnBW last week ended a two-part debt deal after setting final terms, while Slovakia said it could also delay a syndicated euro-note offering due to market turmoil. Marlet.

Globally, it’s a tale of two markets as U.S. corporate deals surge. A hefty $130 billion in blue-chip US corporate debt valued in the two weeks to Friday and already this week the market welcomed the deals of Anglo American Plc and British American Tobacco Plc.

“The U.S. market will continue on the path it’s on, which is good liquidity, with demand across the curve and rates settling higher,” Donlon said. UBS. “It will continue strong until Easter week.”


On Tuesday, issuance in the European primary market is again limited to higher-rated and safer deals, including covered bonds for Royal Bank of Canada and HSBC SFH. The sales will bring the March sales total to around 50 billion euros.

  • Russian social network operator VK Co. Ltd. may run out of cash to redeem its convertible bond and will begin discussions with bondholders to find alternative options, according to a filing Tuesday.
  • Germany is preparing to increase the supply of a rare bond entangled in Russian sanctions, a move that will likely ease pockets of tension in European repo markets
  • The war in Ukraine has taken investors back to cash, with allocations at their highest since April 2020, according to BofA’s Global March Fund Manager Survey
  • Swedish property developer Oscar Properties plans to ‘increase its exposure to green finance’, according to company’s updated financial targets


Investors in Asian investment-grade dollar bonds are hurt from all sides as concerns over China’s ties to Russia collide with concerns over an impending Federal Reserve interest rate hike this week.

  • Spreads on Asian bonds widened by five to six basis points on Tuesday, while yield premiums on Chinese bonds climbed about 10 basis points, traders said. That leaves bond spreads in the wider Asian region on track for their biggest explosion for any quarter in two years, according to a Bloomberg index.
  • Shares of Chinese developers fall the most in more than a decade as a rout in the domestic stock market hits the struggling real estate sector particularly hard


The U.S. investment-grade debt market is booming, with March issuance already topping $137 billion. Seven borrowers rated $8.15 billion on Monday, including BAT and Anglo American.

  • It’s a different story in the region’s junk bond market, with only one bid on Monday after risk sentiment sent the market to its worst weekly loss in nearly two years.
  • Weekly supply expected to preload ahead of the highly anticipated March FOMC meeting on Wednesday
  • Puerto Rico’s record bankruptcy comes to an end as it prepares to reduce its debt by $22 billion, a crucial step that aims to help the Commonwealth boost its economy and repair its finances

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