With the year coming to an end we’ve taken a quick look at the more than 200 new bonds issued in 2019 (166 excluding USD) - and how they compare versus previous years.

2019 Key Trends

• Fourth Quarter Boost. A slow Q1-19 and Q3-19 left 2019 on the back foot. YTD deal volume was the lowest since 2016 until the ~€25bn Q4-19 flood. 
• Increased TMT Activity, Equipment Rentals Double. Telco issuance recovered from last year, up 70% to issue 24 new deals in 2019. Rental Equipment offerings doubled to 11.
• Double BB Returns. Double BB issuers made up 52% of deal flow this year, up from 39% in 2018.
• Larger Average Issuance Size. With only 10 more issuances this year, average deal size in 2019 is almost €90m more than in 2016 as better credits dominate.

1. Volumes

Without macro factors pushing opportunistic issuers into the market we could have seen a third successive year of HY market contraction (low rates, Brexit, UK Election). ‘Lower for longer’ rates have fuelled continued HY bond fund inflows as investors search for yield.

2. Industry

• Marked Step-up in Telco Issuance. The Consumer Services segment is dominated by Telco firms, which formed almost 2/3rds of issuance. This represented an increase from 14 to 24 deals 2018-2019 for a total of over €13bn in volume. Although 24 deals also came in 2017, this was broadly in trend given the bumper issuance year.
• Hire and Higher. A jump in Equipment Rental offerings to 11 in 2019 is almost double any of the preceding three years. Within the Industrials industry, this has somewhat offset the fall in Manufacturing and Transportation/ Logistics issuance.
• Healthcare Joins Waiting List. In Healthcare, the booster 2016/17 years for Healthcare Equipment and services dried up supply through 2018/19. Despite many trading well, the 2016/17 issuances are locked in with expensive call schedules that made refinancing impractical this year.

3. Ratings

With S&P recording more than 2.5 downgrades for every upgrade in Q3-19 (Q2-19: 0.93, Q1-19: 2), stronger credits have enjoyed a resurgence as fears linger about the end of the current cycle.

• More double BB issuers. At the top end, double BB issuers have recovered from lows in H1 2018 to outnumber single B issuers in 2019. A record low rate environment enabled 4 issuances at or below 1%, and 19 at or below 2%. 
• Fewer single Bs. After the dominance of single B issuers throughout 2016/2017, volumes slid in 2018/19. Issuers have swung back toward cheaper rates in the TLB market, especially for the more highly leveraged buyout situations.
• CCCs peaked in late 2017. For the small number of deals marketed at CCC, count increased until the end of 2017, before again shrinking. Q4-17 saw the highest deal flow, of the 8 deals, 6 are trading north of 103, with only the Picard 2024s notably below par at 96. 

4. Size

• Changes in average deal size are driven strongly by the credit quality of the issuer. With the dominance of single B throughout 2016/17/18, average tranche size fluctuated between €300-€400m, but the 2019 uptick in double BB activity pushed this to over €450m.