FIG issuers crush new issue premia as credit bid rips

Financial institutions increased their issuance volumes in 2025 but not enough to satisfy investors, whose appetite for credit has driven spreads to historic tights.

And while spreads widened during the volatility following US president Donald Trump’s April 2 tariff announcement until July, from August on, investor demand pushed spreads tighter and suppressed the new issue premiums (NIPs) that had risen even before the US policy revelations.

It was not as if issuers were paying big NIPs at the start of the year, with many of January and February’s benchmark’s priced close to fair value. The average issue premium paid on a benchmark deal was just 1.6bp in January and 1.5bp a month later across all unsecured FIG asset classes in euros and sterling, according to GlobalCapital’s Primary Market Monitor.

But in March, amid heavy order book attrition and falling subscription ratios, issuers began increasing NIPs to attract investors. The average shot up to 8bp.

Trump’s sweeping tariff threats injected volatility into global bond markets. But FIG NIPs declined, averaging 7bp in April, 6bp in May, and 5.5bp in June, before falling back to 2bp in July.

After a pause in issuance, the primary market reopened in August and conditions remained constructive for issuers. In the next three months issuers paid slightly increased average concessions but not nearly as much as they had been in March and April. They paid on average 3bp in August, 2bp in September and 4bp in October across all asset classes.

Supply has been uneven, with the bulk of issuance occurring in the first half of the year.

Issuers printed €180bn and £15.5bn in the first five months of 2025, but in the next five months issued just €118bn and £7bn.

Cover ratios were steady throughout the year. Across all unsecured asset classes in sterling and euros, benchmarks were on average three times subscribed in January and February, dipping to 2.5 times in March, and then returning to around three times subscribed every month from April to July.

In August, average cover ratios increased to 3.2 times, then again to 3.7 times in September, then down again to 3.1 in October.

Between January and October in 2025 there was €292bn of unsecured FIG benchmark issuance in euros and sterling from 368 tranches. Order books were disclosed on 94% of them. Of that €270bn-equivalent of issuance, orders reached €797bn-equivalent, or a cover ratio of 2.95.

That cover ratio was almost identical to the same period in 2024 when €268bn was issued over 355 tranches. Order books were disclosed on 96% of those tranches. For that €257bn-equivalent of issues, demand was €762bn-equivalent; a cover ratio of 2.96 times.

With supply outstripping demand, spreads tightened across asset classes. For senior fixed rate euro deals, the average reoffer spread was 108bp over mid-swaps in 2025 to October, which was 19bp tighter than the 127bp average in the same period the year before.

In senior non-preferred, spreads tightened even more, with an average of 116bp over mid-swaps in 2025, 23bp tighter than the 139bp average in 2024 to October.

The average spread on tier two fixed rate euro deals was even more extreme. The average reoffer spread was 183bp over mid-swaps in the first 10 months of 2025, down a 44bp on the corresponding period in 2024.

And tightest of all, yields on euro alternative tier one notes averaged at 6.43%, down from 7.29% in the same period in 2024, an 86bp drop.