The slowdown in the European corporate bond market continued in the third quarter of 2022 as markets continue to be heavily impacted by high inflation, caused by supply constraints and the war in Ukraine. This has had a negative impact on economic growth in Europe. There were 197 deals and c.€122bn raised in Q3 2022; lower than Q2 2022 in terms of number of deals raised during the quarter (248 deals by comparison), and in comparison to the c.€152bn corporate debt raised in Q2 2022. It was also significantly lower than the 297 deals and c.€183bn raised in Q3 2021.

In the challenging economic environment, high yield bond issuances continued to dwindle in Q3 2022 as borrowing costs continued to rise with the Bank of England, European Central Bank and the Federal Reserve all increasing interest rates in Q3 2022. There were only 26 high yield bond issuances in Q3 2022 and c.€8bn raised, the lowest for any quarter since 2018. Half of the issuances occurred in September after the usual fall-off in activity during the summer months, with 12 of the 13 issuances priced between 1 September 2022 and 16 September 2022. There were no issuances with a triple-C rating or below in Q3 2022 as investors avoided taking on additional risk.

The average yield-to-maturity at issuance continued to increase across all investment grade and high yield rated bonds in Q3 2022 compared to Q2 2022. The credit spread between BBB rated and BB rated bonds widened to 3.1% in Q3 2022 compared to 2.3% in Q2 2022 as investors avoided riskier assets and the credit spread increased by more than 1.5% in comparison to Q3 2021.

The current economic uncertainty also weighed in on the Green/ESG bond market, which saw a slowdown in the quarter. There were 65 deals and c.€34bn raised in comparison to the previous quarter, which saw 83 deals raising c.€45bn.