Summary

• February 2025 was the second most active February ever, behind February 2024’s record setting month
• February 2025 fell short of issuance projections and saw activity accelerate in the latter half of the month
• New issue premiums widest toward end of month and deal execution currently in very solid shape
• Strong demand across the curve for investment grade (IG) credit to capture absolute yields
• Issuers and investors will continue to monitor Trump cabinet policies and the Fed’s developments
• March 2025 is likely to be a strong month with IG yields being less volatile than U.S debt

 

February 2025

The IG credit market opened February with a shaky issuance backdrop shaped by the Trump administration officially announcing sweeping tariffs on Canada, Mexico, and China, while warning European levies are coming.

The Fed’s hawkish monetary policy stance and much anticipated earnings from some of the world’s largest companies disrupted the issuance landscape further. As the month progressed and market participants digested the data, the high-grade credit market found its footing as issuers appropriately navigated the volatility and entered the primary market. Despite these challenges and falling short of the projected issuance volume of $175b, February proved to be a strong month. With a surge of issuance in the latter half, this month closed as the second most active February ever with $161b in new issue volume.

Issuer activity was primarily driven by refinancing needs, general corporate purposes, and M&A-related transactions. New issue concessions, compression, attrition, and oversubscribed order books remain in line with historic data. Corporates led issuance

volume, with FIG activity having a moderate showing, and emerging markets seeing limited participation. Issuers favored the long end of the curve with 10-30y and 30y+ dominating issuance volume. February’s issuance was punctuated by notable transactions from HSBC, Eli Lilly, Barclays, and a handful of energy and utilities who kept the primary supply surging.

AmeriVet Securities remained active in the capital markets throughout the month as we Co-Managed 11 deals across 26 tranches worth $29.2b of high-grade debt – HSBC’s $7b 5-part debt offering, KeyCorp’s $750mm 6NC5,  Southern Company’s $1.8b 30NC10, Exelon Corp’s $1b 2-part debt offering, Eli Lilly & Co’s $6.5b 6-part debt offering, Union Pacific’s $2b 2-part debt offering, Sysco Corp’s $1.25b 2-part debt offering, Mizuho’s $1.9b 3-part debt offering, UBS’s $3b 2-part debt offering, Bank of America’s $2.5b debt offering, and Barclay’s $1.5b PerpNC10 – continuing to add value with our focused outreach to our Tier II and Tier III professional retail investor base.

 

March Outlook

The new issue calendar for March is calling for $185b versus ~$142b that issued in March of 2024.

Looking ahead, the trajectory of the high-grade credit market will continue to be sensitive to the pace of inflation and issuers’ ability to navigate dynamic market conditions.

Broadly speaking, the market will continue to monitor key economic data but continue a balanced focus on Fed activity and the Trump administration’s evolving policy agenda. The market is pricing in the likelihood of two rate cuts this year, likely to occur in the second half of 2025.

We expect March issuers to navigate the economic calendar and enter the primary market when favorable conditions emerge throughout what we forecast to be a strong month with a better economic backdrop than what has been observed thus far in 2025. On the investor side, as volatility in U.S debt persists, and the period of subdued volatility in the IG bond market continues, we expect to see bullish sentiment and large inflows into the asset class due to stability and yield

 

U.S. Treasury

 

CDX Investment Grade Index

 

Bloomberg US Agg Corporate Avg OAS and YTW

 

Market Flow

 

March Economic Calendar

 

AmeriVet Securities: February 2025 Tombstones