Bond market storm: Europe sold 49.6 billion euros of bonds in a single day, setting a historical record!

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The European bond market is experiencing a historic issuance frenzy, signaling the end of the summer lull and the start of a September financing boom.

According to data compiled by Bloomberg, on Tuesday, 28 issuers sought financing with a total amount reaching at least 49.6 billion euros (about 57.7 billion USD), breaking the previous single-day issuance record of 47.6 billion euros set earlier this year, marking an unprecedented level of activity in the European primary market.

This record-breaking scale of bond issuance reflects the traditional rebound in issuance in September. Governments and corporations are returning to the market after the summer holidays, making advance arrangements for financing needs for the remainder of the year.

The core driving force behind this issuance boom comes from large-scale financing by sovereign states such as the UK and Italy. Persistent capital inflows into bond funds throughout the summer have also provided strong demand support for new bond issues. The scale and speed of this return have exceeded normal expectations, with robust demand even overshadowing concerns about the fiscal health of some countries.

Huge Orders Flood into UK and Italian Sovereign Debt

Among the record-breaking issuances, large-scale transactions in sovereign bonds have been the focal point.

The UK issued 14 billion pounds (about 18.7 billion USD) of 10-year gilts via syndication, setting the country's largest single issuance record. The offering received subscription orders totaling over 141 billion pounds.

At the same time, Italy also successfully issued a total of 18 billion euros in bonds, including 13 billion euros in seven-year notes and 5 billion euros in 30-year bonds. These two transactions attracted over 218 billion euros in demand, once again proving the market's strong interest in high-yield sovereign debt.

High yields are the key factor attracting investors to buy heavily.

Dan Shane, Head of EMEA Syndicate for Debt at Morgan Stanley and one of the bookrunners for the UK gilt deal, stated that the success of this transaction “demonstrates the strong demand for the UK gilt program.”

He pointed out that the new issue premium on the transaction was less than 1.5 basis points, and international buyers accounted for 40% of the total. Dan Shane added:

“What’s particularly encouraging is the strong participation intent shown by international central banks in the order book; the bonds they purchased will become part of their central bank reserve management.”

Global Bond Issuance Wave Plays Out Simultaneously

Apart from sovereign issuers, the corporate world is also actively taking advantage of this window for financing.

Although borrowing costs have risen from last month’s lows, many banks and companies are still flocking to the market. French firm Unibail-Rodamco-Westfield successfully issued a 685 million euro perpetual hybrid bond.

The key factor driving demand for corporate bonds is the almost uninterrupted inflow of investor funds into bond funds throughout the summer. This continued influx provides ample “ammunition” for new bond issues, allowing corporates to successfully complete their financing plans.

This bond issuance boom is not limited to Europe. Similar busy scenes are being seen in other major markets globally.

Saudi Arabia plans to issue 5-year and 10-year Islamic bonds (Sukuk), and has already received approximately 15 billion USD in orders. This move aims to finance its budget deficit and “Vision 2030” diversification plan.

In Japan, at least seven companies have launched dollar bond issuances, expected to make this the busiest week of global debt sales this year. Japanese issuers are poised to surpass the 100 billion USD mark in total dollar- and euro-denominated bond sales for the first time.

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