- We expect solid new issue volume of EUR 125-135bn next year.
- This means that the covered bond market will grow for the second time in succession (net supply of around EUR 30bn).
- New issue activity is likely to be significantly raised in the first two months of the year. Not only because the largest volume of bonds will mature then (around EUR 23bn), but because rising spreads will also provide an incentive to launch issues as early as possible.
- A larger volume of maturing bonds of EUR 101bn, strong credit growth, new issuers, and the refinancing of the ECB’s longer-term refinancing operations (TLTRO-II) are all factors which will support strong primary market activity.
- Conversely, reduced ECB activity, fewer investors, wider spreads and growth in deposits could act as an obstacle to new issue business.
- Political risks, particularly the debates about the Italian budget, Brexit, and trade disputes with the USA pose risks for the primary markets.
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