The US Dollar Credit Market is Booming, But Are We Heading for a Bubble?
The US dollar credit supply saw a significant surge in October, with corporate issuance hitting a robust $98 billion. While this figure is slightly below September’s $119 billion, it still ranks as the third-largest monthly issuance of 2025, trailing only March and September. Year-to-date (YTD), corporate issuance has already surpassed 2024’s total of $753 billion, reaching $790 billion—a number that’s second only to the record-breaking year of 2020.
But here’s where it gets interesting: the bulk of October’s supply was concentrated in longer maturities, particularly in the 9-12 year and 17+ year buckets. Corporates issued $19.2 billion in the 9-12 year range and a staggering $48.4 billion in the 17+ year range. This trend underscores a clear strategy among companies to lock in long-term funding amid stable interest rate expectations. But is this a sign of confidence or a risky bet on future economic conditions?
Tech giants are leading the charge in another notable trend: the rise of Reverse Yankee bonds. Alphabet kicked off November with a massive €6.5 billion six-tranche deal, a move that aligns with the growing number of US tech companies tapping into the euro market in 2025. The allure? Relatively tighter and outperforming EUR spreads compared to USD spreads, offering significant cost savings. YTD, Reverse Yankee supply has already reached €64 billion, and we expect this to climb to €80 billion in 2026. Tech issuers, particularly those financing AI and cloud infrastructure, are driving this surge. But as USD spreads continue to underperform, is this shift sustainable, or are we witnessing a temporary arbitrage opportunity?
Financial supply also saw a slight uptick in October, marking the second consecutive month of growth. Bank senior issuances rose to $36 billion, an $8 billion increase from September. With redemptions remaining high, the primary market is expected to stay active in November. Meanwhile, the capital segment saw $5.5 billion in issuances, a $3 billion drop from the previous month but in line with October 2024 figures. The most dramatic increase, however, was in the finance segment, where issuances more than doubled to $34 billion compared to September.
And this is the part most people miss: while the credit market’s strength is undeniable, the concentration in longer maturities and the reliance on cross-currency dynamics raise questions about long-term stability. Are companies locking in rates now to avoid future volatility, or are they overestimating the stability of current economic conditions?
As we look ahead to 2026, the forecast for Reverse Yankee supply suggests continued growth, fueled by tech issuers and favorable EUR spreads. But with the cross-currency basis swap anchored at negative low single-digit levels, the sustainability of this trend remains uncertain. Is the US dollar credit market on solid ground, or are we building a house of cards?
What’s your take? Do you see this surge in credit supply as a sign of economic strength or a warning sign of potential risks ahead? Let us know in the comments—we’d love to hear your thoughts!
