(Bloomberg) -- European bond issuance has reached a record-breaking €1.705 trillion ($1.8 trillion) this year, passing the high-water mark previously set in 2020.
Debt sales in the region’s publicly-syndicated market hit the milestone on Thursday, according to data compiled by Bloomberg. The figure includes publicly syndicated issuance of euro, sterling and Reg S dollar-denominated offerings sold in Europe.
Sovereigns, supranationals and agencies as well as financials have been at the forefront of the borrowing spree. The need to finance ever-growing debt piles has spurred issuance from public sector borrowers, with the UK being a case in point.
The country’s debt management office raised £4.25 billion ($5.38 billion) through a syndicated debt sale on Tuesday, its first such deal since Chancellor of the Exchequer Rachel Reeves unveiled £40 billion of tax rises and ramped up borrowing last month. Demand passed £65 billion which was the highest ever level of demand for an index-linked gilt offering. Countries such as Belgium, France, Greece, Italy and Spain have also seen record bids for their debt.
The quantum of new sales is striking given that it beats the record set four years ago when borrowers rushed to the market to bolster their finances in the face of the Covid pandemic.
“The massive volumes of issuance in the bond market have been absorbed very easily this year,” said Paula Weisshuber, head of corporate debt capital markets for Europe, Middle East and Africa at Bank of America. “Spreads are at attractive levels and issuers have already been front-loading for 2025.”
Bloomberg’s euro-aggregate corporate investment-grade index has returned 4.67% since the start of the year and Bloomberg’s euro high-yield index 7.42% over the same time period.
Banks and real estate companies have been among those which made the most of near-constant buoyant market conditions to raise new debt.
On Tuesday, Sweden’s Heimstaden Bostad AB sold the first fresh junior debt offering from a property company since late 2021. Last week, Austria’s Raiffeisen Bank International AG raised new capital to replace an Additional Tier 1 bond more than six months after an earlier deal failed.
“Some of this resilience is due to technical factors like positive inflows,” Benjamin Melman, chief investment officer of Edmond de Rothschild Asset Management, wrote in a note.
Sales are likely to be even higher next year and 2026 as high levels of debt become due, said Cem Keltek, credit strategist at Deutsche Bank Research.
“The main risk to that would be a rapidly deteriorating European growth outlook and more comprehensive US tariff threats than the market is anticipating,” Keltek said. “That could weigh on broader market sentiment, shut primary market access temporarily and could also see issuers reevaluate.”
--With assistance from Paul Cohen.
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