Global Credit Weekly

Supply signaling

July 3, 2025 | Amanda Lynam, Dominique Bly

Key takeaways

  • 2Q2025 was a tale of two cities: significant market volatility in the beginning of the quarter eventually gave way to a more benign market backdrop. As we outlined in our 3Q2025 Global Credit Outlook, we expect episodes of macro volatility will likely remain a prominent feature of the investing landscape over the medium term, as we navigate two-sided risks.
  • Many market participants have been focused on how this dynamic backdrop is influencing a wide range of corporate actions. Two weeks ago, we took stock of the signals from M&A activity, and flagged that elevated volumes suggest corporates are moving ahead with their strategic needs – despite residual uncertainty. This week, we focus on debt capital markets issuance.
  • As Exhibit 1 shows, USD IG year-to-date gross supply has set a new post-pandemic record, and USD HY issuance is tracking just behind 2024 (which was an active year by historical standards). We believe management teams are retaining a version of the conservative approach they used during the pandemic, pre-funding well in advance of scheduled maturities and taking advantage of open ‘windows’ to raise liquidity. And while interest rates are elevated by historical standards, spreads are back toward the bottom of the longer-term range – which has likely encouraged management teams to move forward with issuance needs (with some maturity preferences).
  • As indicated by resilient index level spread performance, this gross issuance has not been disruptive to market valuations. USD IG spread concessions have been very modest, at 3.3bp on average, so far this year (per Bloomberg data). And in USD HY, the share of debt issuance earmarked for debt repayment or refinancing is still hovering at a record 72%.
  • Dispersion has been a consistent theme across corporate credit over the past several quarters. Our analysis of total return performance for USD IG and HY highlights how sector leadership shifted this year, in response to macroeconomic developments. Anecdotally, we also see evidence of dispersion within sectors, which underscores a ‘back to basics’ approach to credit selection.

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Authors

Amanda Lynam, CPA
Head of Macro Credit Research, Portfolio Management Group
Amanda Lynam, CPA, is Head of Macro Credit Research within the Portfolio Management Group. In this capacity, Amanda leads a team that generates differentiated investment strategy research across global fixed income, liquid corporate credit (IG, HY, leveraged loans) and alternative asset (private credit, real estate) markets.
Dominique Bly
Macro Credit Research Strategist, Portfolio Management Group
Dominique is a Macro Credit Research Strategist. Prior to joining BlackRock, Dominique was an Investor Relations professional at Neuberger Berman, specializing in Private Debt, and a Consultant at Accenture. Dominique received a Bachelor of Science in Business Administration from UC Berkeley Haas.

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