Weekly Market Summary

Extra Credit^*

• Currently, expectations are for $1.5 trillion of gross issuance and $610 billion of net issuance in 2025 for investment-grade credit. This implies a year-over-year increase of $100 billion or 7% in gross terms and an increase of $30 billion or 5% year-over-year in net, as current estimates for 2024 supply will end up at $1.4 trillion for gross and $580 billion for net.
• Maturities are expected to climb once again this year largely in non-fins. Non-financial maturities are expected to rise 29% year-over-year, with financial maturities up 11% year-over-year. The surge may ignite a larger refinancing need, driving gross issuance higher.
• Several months in 2024 ranked among the largest ever for investment-grade supply, in both gross and net terms. When looking across financials, industrials, and utilities, supply was up at least 15% in each sector year-over-year as issuers came to market after a couple years of slower supply from higher rates.
• The maturity wall in high-yield bonds has not changed from this time last year, with nearly $270 billion of debt due in the next three years. As a result, we forecast $130 to $150 billion in bond-for-bond refinancing supply. Expectations are for $60 to $80 billion of bond-for-loan refinancing as dual issuers tap both markets. The maturity wall in loans has been paid down significantly, which should reduce refinancing pressure on loan issuers and lead to fewer loan tourists in the high-yield market.
• Bank-loan and high-yield bond default rates, excluding distressed exchanges, finished October at 1.30% for high-yield bonds and 0.55% for bank loans, up and down from 1.18% and 0.98% in September. This is also well below the long-term historical default rate of 3% for loans and 3.4% for high yield, and the historical post-GFC default rates of 2.3% and 2.5%, respectively.

Sources: Bloomberg and JP Morgan as of 11/4/24.