US IG Wrap — Supply slows, but is it a sign of weakness or a timing issue?

William Hoffman
+Stuart Aylward

25 October 2025•4 min read

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It was a surprisingly slow week for US investment grade bond supply.

The market was expecting around $22bn of supply with some desks calling for as much as $30bn. But only $10bn ended up pricing from nine borrowers with $7.3bn of that coming on Monday (20 October).

Charlotte, North Carolina-based bank Truist priced the largest deal on the week with its $2.5bn dual-tranche bond package tightening by as much as 27bps from initial price thoughts with strong demand. As we wrote this week, the deal seemed to show that the market was looking past the regional bank volatility of the previous week that led to a sharp stock sell off.

However, just $2.7bn of IG-rated bonds priced the rest of the week as Truist’s notes underperformed in the secondary. Its $1.25bn 4.964% SUNs due 2036 priced at par with a spread of 98bps over Treasuries but this week was trading below par at to spreads as wide as 104bps over, according to ICE Vantage data.

Spreads have widened out slightly, deals are pricing well but with softer follow on demand and fewer borrowers are accessing the market. Is this a sign of weakness for the credit space?

Bankers told 9fin this is more of a timing issue as banks have few funding needs right now and corporates are still coming out of earnings blackout. We discuss it all here in greater detail.

For now the market is taking more of a wait and see attitude with the expectation that strong earnings performance will propel more borrowers to the market in the coming weeks.

For example, on the back of strong earnings fast fashion retailer H&M returned to the bond market for the first time since 2023 to price €500m eight year notes in the Euro IG market this week. Perhaps US supply will follow.

“I think investors are now seeing the strength of corporate earnings and feeling a little more forgiving,” one syndicate banker said. “For corporates the flattening on 10’s / 30’s has been helpful to make it more attractive but more flattening is required.”

Spooky season

While Halloween is not a bank holiday there have been some strange issuance patters in the past.

Last year, with Halloween (31 October) falling on a Thursday the market seemed to treat it like a shortened week by front loading most the supply. Likewise, in 2023 the popular trick-or-treat date fell on a Tuesday and borrowers packed in most of the week’s supply on the Monday like an overstuffed sack of candy.

This year for better or worse, Halloween falls on a Friday so borrowers will have a full week to get deals done. But each of the last three years at least one deal has priced on Halloween itself, so the holiday may impact timing during the week but has not been an impediment when issuers need to go.

The majority of syndicate desks are anticipating a busier Q4 than in previous years as borrowers target November for some pull forward issuance.

This will likely be driven by favorable market conditions and the tight spread environment. If, however, there were to be unexpected shocks (be they economic, corporate or geopolitical) then supply could rapidly dry-up as most borrowers have done well to proactively refinance what they need to. After all there is little point pre-funding if it doesn’t make economic sense to do so.

With how tight spreads currently are some banks may still look to tap the market even though JP Morgan, Goldman Sachs and Morgan Stanley have already priced in dollars while Bank of America and Citi opted for Euros.

The area to watch may be subordinated bank supply as the financial institutions could take advantage of strong market dynamics.

“Ultimately the banks are better capitalized than they have ever been, yet I would have thought we’d have seen more sub-level issuance as it’s always best to issue the harder stuff when times are easy,” another banker said.