The start of the year has handed bond issuers a phenomenal opportunity for funding. Those tha have sat on the sidelines so far are missing an incredible opportunity to get funding through the door.
Last Wednesday was the busiest day for euro issuance ever, with almost €51bn of new bonds priced across iasset classes, according to Informa Global Markets. Investment grade issuance in the US lazt week reached a record $95bn, making it the busiest weeek since May 2020, according to the Financial Times.
By the end of January 7, global bond issuance had hit a record $230bn-equivalent, according to Bloomberg.
Issuers voluntarily letting this market pass by are missing a trick.
In short, bonds are flying off the shelves even faster than Lebubus.
The supply-demand imbalance is skewed in issuers' fabour as investors scramble to reload on fixed income, especially credit. This is depsite geopolitical tensions rising, and even US central bank independence being questioned with yields creeping higher. Normally, such backdrop does not bode well for spreads but still the investors come.
Credit spreads instead keep reaching new tights and unlike in the pandemic when the market was last this hectic, rates are higher and there is no quantitative easing to do the heavy lifting in the order book.
Many market participants have criticised the European auto sector as one of “the least investable areas in credit,” yet Renault’s financing arm RCI Banque last week printed a €900m long six year senior bond, scoring its largest deal. There was plenty of demand for the paper as the final order book reached €5.5bn.
But, arguably, the most subordinated part of the European FIG market best illustrates the strength of demand.
Market for the taking
Many predicted lower FIG issuance this year than last while cash is still pouring into funds. Banks are feasting on the mismatch with fresh additional tier one deals.
The best example is UniCredit's historic €1bn perpetual non-call 10.5 year AT1 that became the longest existing euro deal in the asset class as well as the tightest outstanding.
Sure, UniCredit lost €2.7bn of demand from its peak €4bn book, to end the trade with €1.7bn of orders, a somewhat modest oversubscription for an AT1. And yes, thee paper was also spotted a touch below reoffer in the secondary market. But issuing AT1 capital is a strategic necessity and not something a bank does often. UniCredit sold one each in 2025 and 2024 after starving the market for more than two years by redeeming existing AT1s without replacing them.
Despite that performance, investors were undeterred when it came to Raiffeisen Bank International's new AT1 only four months after its previous deal.
The lender has had trouble issuing and refinancing its AT1s as it has been unable to exit its previously significant operations in Russia. Yet, the deal sailed smoothly, compressing both the yield and the reset spread from the previous trade.
With demand remaining stubbornly high, the supply picture should give investors confidence.
In GlobalCapital’s recent survey of the FIG market, a quarter of respondents said euro capital issuance may rise but by less than 20% year on year, with about 38% saying volumes will fall but by less than 20% versus 2025. Almost 13% said subordinated capital issuance will fall by more than 20% in 2026, which contrasts with no respondents predicting that there will be a similar drop in senior issuance in euros.
UniCredit, for example, expects €35bn in tier two and €25bn-€30bn in AT1s issuance for 2026. This compares to €35bn and €25.3bn respective additional and restricted tier one issuance in 2025 and 2024, according to GC’s Primary Market Monitor. There was €54.5bn and €47.4bn tier two volume from bank and insurance companies in each of the two preceding years.
With less supply than the current prevailing demand, historically tight spreads should make the decision to print now a no-brainer for credit issuers with funding to do.