Table 1

Global issuance summary and forecast
(Bil. $)	Nonfinancials	Financial services	Structured finance*	U.S. Public Finance	International public finance	Annual total
2018	2,043.90	2,020.50	1,139.10	342.6	476.1	6,022.10
2019	2,455.80	2,268.70	1,120.30	422.5	767.7	7,035.10
2020	3,368.00	2,685.90	1,104.40	481.1	1,128.50	8,767.90
2021	3,003.50	3,145.10	1,300.30	477.9	1,200.50	9,127.20
2022	1,953.50	2,705.90	1,187.00	389.3	1,064.90	7,300.60
2023	2,244.40	2,782.50	1,089.00	383.7	1,214.40	7,714.00
2024	2,820.30	3,274.90	1,273.60	512.5	1,350.50	9,231.70
Q12024	810.5	930.3	324	103.5	283.1	2,451.40
Q12025	840.8	881.2	342.1	119.3	374.4	2,557.90
2025 Ranges	-6% to 4%	-10% to -2%	-7% to 3%	-8% to 2%	10% to 35%	-5.3 to 6.2%
Data as of March 31, 2025. Includes infrastructure. *Note: Structured finance excludes transactions that were fully retained by the originator, domestically-rated Chinese issuance, and collateralized loan obligation resets and refinancings. Sources: Refinitiv, Dealogic, and S&P Global Ratings Credit Research & Insights.

The ongoing tariff disputes and the speed of developments are leading to significant market uncertainty. As a result, we are approaching our issuance forecasts for the remainder of the year this quarter with ranges, rather than single-point projections surrounded by a range.

Our projected range for issuance growth in 2025 is -5.3% to 6.2%. However, the impact of the international public finance (IPF) sector on the total is somewhat skewed, and large. Excluding IPF, the overall range for issuance growth this year becomes -8.0% to 1.2%.

These ranges are our best estimates at reasonable downside and reasonable upside scenarios. We believe that currently, downside risks prevail.

Our downside assumptions:

• April 2, 2025, tariffs are implemented unchanged after the 90-day pause.
• This leads to significantly slower economic growth in the U.S., with possible quarterly declines in GDP. We also forecast negative impacts on other countries' growth, but to a lesser extent.
• Treasury market volatility continues and becomes disorderly, forcing the Federal Reserve to intervene through Treasury purchases. This intervention may not significantly lower Treasury rates as much as stabilize them.
• China's growth slows, which could spur additional stimulus measures, with an unclear impact on issuance.
• There will be increased market volatility and further financial asset price losses.
• Merger and acquisition (M&A) deals decrease for the remainder of the year.

Our upside assumptions:

• U.S. and China find an "exit ramp" ahead. This results in some increased tariffs by the U.S. but far from their current levels of over 100%.
• This impasse is reached sooner than the 90-day pause ends.
• The U.S. and other countries manage to negotiate lower tariffs than those proposed on April 2, 2025.
• Market volatility subsides, including within Treasuries.
• Inflation could tick up as a result of higher tariffs. This could be short-lived and not too punitive, but could still cause the Fed to wait longer to lower rates than markets currently expect.
• The recent pause in issuance ends and does not do lasting damage to the year's totals, but rather pushes back normal spring deal activity.
• There is some lost M&A activity, but deals resume to a more normal level by the end of the second quarter.

Both scenarios hinge on the ability of the U.S. and international trading partners, particularly China, to quickly establish final trading agreements. Neither scenario above is likely to play out exactly as we expect, and they leave a wide range of possible outcomes in between. Also, things could deteriorate further than the downside if, for example, any parties further increase proposed tariffs and if economies are faced with both falling growth and increasing prices as a result.

Tariffs Bring Volatility, Price Declines, And A Need For Clarity

Market volatility rises on rapid developments, leading to a high level of intraday swings.  Tariff threats and increased market volatility began as early as February. But it was still possible that the newly elected Trump administration in the U.S. would keep its focus on more growth-friendly goals, such as easing regulations on businesses or extending tax cuts.

Once tariffs took center stage and were imposed on April 2, market volatility soared across all financial markets. The most notable swings happened on an intraday basis (see chart 2). This intraday volatility has started to subside with the 90-day pause on most proposed tariffs; however, the situation with China has escalated further, leaving markets vulnerable to further volatility ahead. One particular concern is the lack of clarity on the ultimate direction and extent to which tariffs could move.

Increased volatility led to lower issuance in April.  Despite rising tariff threats in the first quarter, global corporate bond issuance (including financial services) largely continued the strong monthly trends set last year. However, after Apr. 2nd, bond issuance has fallen off this month (see chart 3). Similar declines in issuance occurred in late 2018 as a result of an increased tariff conflict between the U.S. and China at the time, particularly for global speculative-grade issuance. So this response is not surprising, but it demonstrates of how quickly issuers and investors are reacting.

Despite daily swings, government bond yields remain largely range-bound.  Recent movement in government bond yields has been swift--and not just for U.S. Treasuries--but closing values have still remained near levels seen since Nov. 5, 2024 (see chart 4). The wide daily fluctuations shown earlier have not always led to dramatic changes for closing values recently. We will continue to monitor benchmark yields and currency values closely, particularly if their behavior becomes disruptive.

Investors (and issuers) face the potential conflict between slower growth and higher prices.  One of the main difficulties facing issuers and investors is the unknown outcomes for growth and inflation proposed tariffs present. Higher tariffs could arguably result in both slower growth and increased inflation (even if only as a one-off increase to inflation).

When looking at relative yield changes in the U.S., it seems clear that markets are pricing in a classic flight-to-quality (see chart 5). Despite volatility on a day-to-day basis, long-term Treasury yields have fallen in 2025. Meanwhile, corporate yields have risen, with minimal increases among the most creditworthy rating categories and 'B' secondary corporate yields rising nearly 200 basis points (bps).

However, yield curves are behaving as if investors are also concerned about inflation (see chart 6). Generally, yield curves steepen as investors anticipate stronger growth ahead, but our economists' forecasts generally call for slower growth as a result of proposed tariffs. This clear conflict in signals is emblematic of the currently elevated uncertainty.

The U.S. dollar is having its "special status" questioned.  It's historically rare, but the U.S. dollar value is declining relative to most other currencies as Treasury yields are rising. However, recent weakness in the dollar is still within ranges seen in recent years and even appears to be more of a reversal of recent relative strength in the lead up to 2025 (see chart 7).

Given that the dollar is depreciating at a time when it might normally appreciate (because of rising government yields), it does raise questions about its place as a safe-haven or global benchmark being reduced. For our purposes, because we report all of our issuance figures in U.S. dollars, any weakness will otherwise boost non-dollar denominated totals. We think any conclusions about changes in the dollar's global status are shaky at this time.

Ranges Of Issuance Projections

Each asset class's projections are primarily tied to the broader assumptions we laid out above and their ultimate impact, with more sector-specific considerations detailed below.

The nonfinancial corporate issuance range spans -6% to +4%.  Nonfinancial issuance finished the first quarter with a growth rate of 3.75%. Though it faces the same headwinds as every sector, some supportive factors remain. Previously elevated cash balances among our rated population have fallen considerably since their 2020 peak and are anticipated to decline further, taking away one avenue to deal with upcoming maturities outside of bond issuance (see chart 8).

Upcoming maturities also remain sizable. At the start of the year, we estimated roughly $3.7 trillion in rated debt coming due over the following three years (2025-2027). This is only 1.3% less than what was coming due over the following three years at the start of 2024 through 2026. On a face-value basis and including nonrated debt, we estimate roughly $5.7 trillion in global nonfinancial corporate debt coming due between 2025-2027, compared with $5.86 trillion at the start of last year's three-year window (2024-2026).

We expect M&A activity to slow this year as a result of tariff uncertainties and their impact on financial markets and economies. In the first quarter, we observed roughly $555 billion in announced deals, a slight decline (3.5%) from the first quarter of 2024. Increased volatility in an already high interest rate environment presents substantial challenges to funding growth-oriented projects until financial markets regain stability.

Our range for financial services issuance growth is -10% to +2%.  Global financial services issuance finished the first quarter down about 5.25% relative to last year, with declines across all major regions. This was in part due to very strong totals last year, particularly from European banks; however, financial services may have also been the first to respond to increased uncertainties ahead.

That said, upcoming maturities for financial services remain sizable. The global financial services companies we rate have roughly the same amount of debt coming due over the next three years at the start of 2025 as they did at the start of last year--roughly $2.6 trillion (see chart 9). If we look at all issuance globally by face value, including nonrated bonds, the period from 2025-2027 shows roughly $7.33 trillion coming due, similarly unchanged from 2024-2026's total of $7.31 trillion. These totals should help keep issuance healthy despite the growing headwinds and potential outcomes described earlier.

Financial services issuance growth in China has been slowing since 2021 after years of exceptionally strong momentum. This general moderation could continue, in our view, given the country's broader debt reduction efforts. However, as with other sectors, financial services issuance in China could surprise to the upside if the government and central bank increase support to offset flagging demand and threats to economic growth.

We project global structured finance issuance growth of -7% to +3%.   Global structured finance issuance ended the first quarter 6% higher than the corresponding period last year. Our projected range for 2025 covers the possibility of 3% growth to a 7% contraction.

Our projected range broadly reflects the conflicting drivers of robust issuance growth in sectors like U.S. commercial mortgage-backed securities (CMBS) and European collateralized loan obligations (CLOs), mixed with expectations that recent U.S. tariff announcements will affect growth in some sectors, particularly consumer-reliant sectors like asset-backed securities (ABS) and residential mortgage-backed securities (RMBS). That said, other assets classes may be further insulated from tariff impacts and could otherwise remain resilient.

While we would normally expect consumers to benefit if central banks lower rates, it remains uncertain how long it may take for these benefits to materialize for individual consumers. As a result, consumer-facing sectors like ABS and RMBS will be in focus in 2025. They represent the lion's share of global securitization issuance, but they're also the most rate-sensitive sectors. Higher-for-longer rates could challenge issuance in these sectors.

Global covered bond issuance fell sharply in the first quarter, down over 40%, led by a 66% decline in Europe. While this is partially explainable by substantial growth over the previous three years, we expect 2025 issuance to ultimately be relatively close to issuance levels of these recent years, if slightly lower.

Issuers have expanded their use of securitization as funding. Under proposed regulatory frameworks, large banks' capital charges on collateral and securitization exposures will, in some cases, be higher. (New frameworks were set to be finalized in 2025, though recent setbacks indicate universal adoption is likely further away.) Higher charges could further incentivize an increased use of securitization to manage risk-weighted assets through significant risk transfer (SRT) transactions. We saw this in ABS and RMBS last year, particularly in Europe.

We forecast a range of -5% to +7% for U.S. public finance (USPF) issuance this year.  Strong issuance totals out of the first quarter may help offset any volatility-driven declines later this year. Through March, USPF issuance has grown over 15% to $119 billion. Aside from the high potential for market disruptions later this year cutting the current growth rate down, the latter half of 2024 also presents difficult comparables to beat at $267 billion. Last year was a record haul for USPF issuance overall.

Though perhaps being eclipsed by tariff updates, there remains the potential for changes to the tax code (which currently allows for a federal tax exemption for interest earned on municipal debt). While the potential loss of this tax exemption may have helped nudge forward some of this year's issuance, we currently think it's unlikely the municipal market will lose the exemption. Still, it could spur similar trends in the early part of this year while speculation remains elevated.

We forecast the widest range for international public finance, driven by big changes in Chinese issuance trends.  IPF issuance increased 32% in the first quarter, easily the largest year-over-year increase. Nearly all of this increase was attributable to China, which saw $276 billion of issuance compared with $191 billion in the first quarter of 2024. While not completely immune to the impacts from the larger tariff-driven financial markets presently, we expect a high level of issuance out of China for the remainder of the year, as debt-swap transactions between local and regional governments and their financing vehicles continue.

Starting in 2026, the level of maturing debt in China (based on face value) will increase substantially as well--an average of roughly $360 billion per year through 2030. The level of maturing debt in the rest of the world will largely stabilize around the current level (roughly $200 billion per year).

First-Quarter 2025 Issuance Summary

Global bond issuance in the first quarter totaled $2.56 trillion, up 4.4% from $2.45 trillion in the first quarter of 2024. Public finance saw the largest increases, led by international public finance (32%), followed by USPF (15.3%). From there, relative growth was much more modest. Global structured finance expanded 5.6%, while nonfinancial corporates grew 3.74%. Meanwhile, global financial services declined 5.3%.

These figures cover only debt with maturities greater than one year and exclude debt issued by supranational organizations and sovereigns. All references to investment-grade and speculative-grade debt are to issues rated by S&P Global Ratings.

Market Volatility Undermines Financing Conditions

Tariff-related turmoil modestly affected yields and spreads in the first quarter of the year (table 2) and contributed to a strong issuance quarter. Markets strongly reacted from the April 2 announcements, triggering abrupt widenings in corporate spreads, especially at the lower end of the rated spectrum, in a context of already restrictive financing conditions in terms of corporate yields. The VIX breached 60 on April 7, and U.S. Treasuries sold off and the S&P 500 equity performance took a hit.

Downside risks are more pronounced for speculative-grade issuers, shut out from primary markets in the first half of April and typically more strained in terms of liquidity and operating margins. Distressed ratios rose to 5.6% at the end of March from 4.3% as of fourth-quarter 2024. They could climb even higher, given that financing conditions affect credit performance with a lag.

Our base-case expectation is for the speculative-grade default rate in the U.S. to be 3.50%, 2.25% in the most optimistic scenario, and 6.00% in the most pessimistic scenario by December 2025. The current economic and market uncertainty (related to the length and size of trade tariffs, the inflationary versus recessionary impact of tariffs on growth, and the monetary policy strategy of the Fed, among the many unknowns) drives our estimates more toward the pessimistic scenario while widening the confidence interval of possible outcomes.

Table 2

Indicators of financing conditions: U.S.
	Restrictive	Neutral	Supportive	2025	2024	2023
M1 Money Supply (% change year over year)*		x		7.5	(1)	5.5
M2 Money Supply (% change year over year)*		x		3.9	-1.5	-2.3
Tri-party repo market :Size of collateral base (bil. $)			x	4,253.50	3,642.30	4,453.20
Bank reserve balances maintained with Federal Reserve (bil. $)*			x	3,261.20	3,567.70	3,021.80
Three-month nonfinancial commercial paper yields (%)	x			4.3	5.34	4.98
Three-month financial commercial paper yields (%)	x			4.32	5.33	4.9
10-Year Treasury yields (%)	x			4.23	4.2	3.48
Yield curve (10-year minus three-month; bns)	x			(9)	(126)	(137)
Yield-to-maturity of new corporate issues rated 'BBB' (%)	x			5.39	5.69	5.61
Yield-to-maturity of new corporate issues rated 'B' (%)	x			9.11	7.56	8.69
10-Year 'BBB'-rated secondary market industrial yields (%)	x			5.43	5.37	5.21
Five-year 'B' -rated secondary market industrial yields (%)	x			9.12	8.21	9.62
10-Year investment-grade corporate spreads (bps)			x	104.6	105.6	154.9
Five-year speculative-grade corporate spreads (bps)			x	297.5	247.1	414.9
Underpriced speculative-grade corporate bond tranches, 12-month average (%)			x	13.4	21.7	41.1
Fed lending survey for large and medium-sized firms		x		6.2	14.5	44.8
S&P corporate bond distress ratio (%)			x	5.6	4.9	9.2
Morningstar LSTA leveraged loan index distress ratio (%)		x		4.5	5	8.8
New-issue first-lien covenant-lite loan volume (% of total, rolling three-month average)			x	92.6	91.4	88.4
New-issue first-lien spreads (pro rata)			x	245	327.5
New-issue first-lien spreads (institutional)			x	344	344.7	443.8
S&P 500 market capitalization (% change year over year)		x		7.9	28.3	-10.3
Interest burden (%)**			x	3.5	5.1	7.7
Data through March 31, 2025. *Through Feb. 28, 2025. Federal Reserve senior loan officer opinion survey on bank lending practices for large and medium-sized firms through fourth-quarter 2024. **As of Dec. 31, 2024. Sources: IHS Global Insight; Federal Reserve Bank of New York, Morningstar LCD and S&P Global Ratings Credit Research & Insights.

U.S. Bond Issuance: Frontloading In Anticipation Of Volatility?

Investment-grade issuance skyrocketed in first-quarter 2025 with $441 billion, more than doubling fourth-quarter 2024 volume and representing the best quarter since the second quarter of 2020. The bulk of market activity was within the 'A' and 'BBB' rating categories, combining for 93% of overall investment-grade volume. The 'AAA' rating category posted its strongest quarterly market activity since first-quarter 2017 with $9 billion.

Mars Inc. ('A')--a consumer products company--topped the list in the quarter with 13-year senior notes for a cumulative amount of $25.9 billion at an average yield-to-maturity (YTM) of 5.2%, with investment banks following. Bank of America ('A-') issued $20.3 billion of medium-term notes split between fixed and floating coupon with a seven-year average tenor.

Speculative-grade corporates reached $54.9 billion, 38% higher than fourth-quarter 2024, yet 18% lower than first-quarter 2024, confirming the primary market's selective attitude toward the lowest end of the rated spectrum. The 'BB' category was the highest contributor, with $33 billion. Quikrete Holdings Inc. ('BB')--a forest products and building materials company--tapped the market with 7.4-year, $5.5 billion senior secured and unsecured notes at an average YTM of 6.5%.

Financial bond issuance was 48% higher than the fourth quarter of 2024, reaching $208 billion, with a very solid quarter for banking, totaling $73 billion. Nonfinancial rated bond issuance was $288 billion in the quarter, 3.1x last quarter's volume. Utilities lead by volume ($60 billion), followed by high tech ($58 billion), roughly half of which concentrated in three companies--Synopsis, IBM, and Oracle Corp.--then consumer products ($39 billion) and health care (34 billion), with Johnson & Johnson covering for over 25%.

Table 3

Largest U.S. corporate bond issuers: First-quarter 2025
Issuer	Sector	Issuance (bil. $)
Mars Inc.	Consumer Products	25.9
Bank of America Corp.	Banks & Brokers	20.3
Goldman Sachs Group Inc.	Banks & Brokers	11.1
Citigroup Inc.	Banks & Brokers	10.3
JPMorgan Chase & Co.	Banks & Brokers	10.1
Synopsys Inc.	High Technology	10
Johnson & Johnson	Healthcare	9.2
IBM	High Technology	8.4
Oracle Corp.	High Technology	7.7
NextEra Energy Capital Holdings Inc.	Utility	7.5
Eli Lilly & Co.	Healthcare	6.5
Wells Fargo & Co.	Banks & Brokers	6.3
Foundry JV HoldCo LLC	High Technology	6.1
General Motors Financial Co. Inc.	Financial Institution	5.7
Morgan Stanley	Banks & Brokers	5.5
Includes issuance from Bermuda and the Cayman Islands. Sources: Refinitiv and S&P Global Ratings Credit Research & Insights.

USPF starts the year at $119 billion in the first quarter

U.S. municipal bond issuance in the first quarter of 2025 was $119 billion, down from $125 billion in the fourth quarter of 2024, but up from $103 billion in the first quarter of 2024. Issuance rose month over month in the first quarter, starting in January with $37 billion and climbing to $42 billion in March (see chart 11).

Breaking out issuance into components:

• New money issuance is 73% of total issuance so far in 2025, compared with 70% for all of 2024;
• Refunding is 12% so far in 2025, down from 17% in 2024; and
• Mixed-use issuance is 15%, up from 3% in 2023 (see chart 12).

The three largest issues in the first quarter were from New York, with $2 billion in state personal income tax revenue bonds; California, with $2 billion in senior subordinate secured revenue bonds; and the University of California, with $2 billion in general revenue bonds.

Table 4

Largest U.S. municipal issues: First-quarter 2025
Issuer	Issue description	(Bil. $)	Date
NYS Dorm Authority	State Personal Inc Tax Rev Bonds	2.04	3/20/2025
California Infrstr & Eco Dev Bank	Sr Sub Secured Rev Bonds	2	2/20/2025
Regents of the University of California	General Revenue Bonds	2	1/28/2025
NYC Transitional Finance Auth	Future Tax Secured Sub Bonds	1.95	2/13/2025
Triborough Bridge & Tunnel Auth	Real Est Transfer Tax Rev Bonds	1.6	1/17/2025
NYC Transitional Finance Auth	Future Tax Sec Subordinate Bonds	1.5	3/13/2025
Los Angeles Dept of Airports	Sub Rev & Ref Rev Bonds	1.43	3/27/2025
New York City-New York	General Obligation Bonds	1.41	3/6/2025
Regents of the University of California	General Revenue Bonds	1.21	3/5/2025
Kentucky Pub Energy Au (PEAK)	Gas Supply Rev Ref Bonds	1.21	2/13/2025
Sources: Refinitiv and S&P Global Ratings Credit Research & Insights.

So far in 2025, issuance by the top 10 states is flat relative to last year, ranging from up 312% for New Jersey when compared with this point in 2024, to down 38% for Alabama.

Table 5

Top 10 states by bond sales: First-quarter 2025
	--2025--		--2024--
State	Rank	Volume YTD (bil. $)	Rank	Volume (bil. $)	Change from previous year (%)
New York	1	16.6	2	14.3	16.10
California	2	14.9	1	19	-21.30
Texas	3	12.7	3	12.5	1.70
Massachusetts	4	4.8	10	3.6	33.80
Alabama	5	4.5	8	4	12.40
Florida	6	3.7	4	6	-37.80
Washington	7	3.3	14	2.4	37.80
Wisconsin	8	3.1	6	4.2	-27.50
New Jersey	9	2.8	35	0.7	311.60
Georgia	10	2.7	13	2.6	1.60
Sources: Refinitiv and S&P Global Ratings Credit Research & Insights.

U.S. structured finance issuance increased sharply in the first quarter

U.S. structured finance issuance continued to carry the global total, climbing 26% through first-quarter 2025 to $204 billion (see chart 13). This represents a three-year high on a quarterly basis, with first-quarter 2025 issuance surpassing the $200 billion level for the first time since fourth-quarter 2021 ($234 billion).

The U.S. market share increased as well in the first quarter-- to 62% from 50% the corresponding period last year and 57% for full-year 2024. This now exceeds the 60% market share level that the U.S. neared in 2021 after two years of decline in 2022 and 2023. We continue to believe higher risk-adjusted yields and the largely stable performance offered by many structured finance sectors will remain attractive to most investors in 2025.

Furthermore, issuers are becoming more creative with their balance-sheet management by using securitizations as a funding tool. However, increasing tensions with U.S. trade partners, which may further impede ongoing affordability challenges, remains our key downside risk.

U.S. structured credit

Collateralized loan obligation (CLO) new issuance volume in the U.S. was $49 billion in first-quarter 2025, according to PitchBook | LCD--a negligible 0.5% decline from the same period a year ago. This sector also posted a new record of $202 billion in 2024.

Broadly syndicated loan CLOs fell 6% to $36 billion in the first quarter, while middle-market CLO issuance increased 21% to approximately $12 billion. Private credit continues to be a hot topic, and middle-market CLOs as a percentage of total new issuance (25%) was up 4.4% percentage points from a year ago and above 2024's full-year share of 19%. This continues the trend exhibited over the past three years as middle market grew from roughly 12% the several years prior to 2023.

The leveraged loan market was strong in 2024, which carried over into 2025 as trailing-12-month leveraged loan origination volume was up 60% in the first quarter of 2025 from the same period in 2024. CLO issuance follows the trend in leveraged loan origination volumes with a lag of about four quarters. While this will likely set the stage for further growth in structured credit issuance into 2025, loan markets have stalled in April amid uncertainty surrounding tariffs and the broader global economy.

While spreads tightened during the fourth quarter, they have widened in recent weeks due to broader market uncertainty surrounding U.S. trade policy. The spread for 'AAA' rated CLOs in the U.S. for the three months ended April 11, 2025, was 121 bps, slightly above the 119 bps on March 31, 2025. April new issues appear to have widened even further, 140 bps-150 bps. The direction of spreads in the coming months as trade policies become more concrete and actions taken by the Fed to cut rates will be a key focus for future CLO expectations.

Asset-backed securities

U.S. ABS issuance was roughly flat through the first quarter relative to the corresponding period last year, with credit card and student loan ABS suffering the largest declines. Meanwhile, personal loan ABS and esoteric ABS modestly increased due to investor demand for investment-grade ABS. While the drivers of underlying issuance differ across asset types, spreads over benchmarks have declined substantially last year from 2023 levels, though they appear to be ticking up again.

Auto loan and lease ABS issuance--which generally leads U.S. ABS issuance, at nearly 50% of total volume in recent years--was flat in the first quarter. Notably, this is off the heels of a record year in 2024.

Prolonged auto tariffs will impair the auto industry, and recent U.S. tariff announcements have affected S&P Global Mobility's light vehicle production and sales forecasts. In April, S&P Global Mobility reduced its production outlook for North America by 944,000 units for 2025 and 778,000 for 2026, the steepest cuts since the COVID-19 pandemic. The reduction of reduced sales volume will, in turn, have an impact on the packaging of auto ABS transactions. (See: "April 2025 Light Vehicle Production Forecast," published April 17, 2025.)

The sector's credit headwinds in 2025 are carried over from last year, as delinquencies and losses in both the prime and subprime auto loan segments are rising and reaching decade highs. (Subprime reached record highs, and prime reached the highest monthly clip since 2010.) These increases are partially attributable to increases to more recent vintages having looser credit standards.

Meanwhile, credit card ABS issuance continues to be a drag on overall U.S. ABS issuance because the sector hasn't recorded growth since 2022. This may be attributable to higher-for-longer interest rates and deteriorating consumer spending and confidence.

On the other hand, issuance of ABS backed by esoteric assets saw modest growth relative to last year, largely due to a significant increase in data center ABS. We believe growth in the nontraditional ABS space will persist further into the year as capital needs in the digital infrastructure sector continue to grow. Assets like data centers, fiber, and cell tower financing are likely to grow the most.

Residential mortgage-backed securities

U.S. RMBS issuance was $35 billion through the first quarter of 2025, down roughly over 14% from the year prior (itself a blockbuster year, with issuance increasing 120% from 2023). Traditional indicators such as existing home inventory and home sales, starts, and builds are beginning to deteriorate after a short period of improvement, keeping home prices elevated.

Buyers have stood on the sideline for much of the last few years as interest rates remain high and further interest rate cuts remain uncertain. Now, another headwind faces the RMBS sector: changes to U.S. trade policy with key trade partners. Despite formal tariff implementation having already been delayed, revised, or reversed, we expect new levies on building materials will put upward pressure on already unaffordable homes. Fewer mortgage originations will slow the packaging of new mortgage-backed securities.

The rate for a 30-year fixed-rate mortgage has fallen from its peak of nearly 8% in October 2023--which was the highest rate in over 20 years--but it remains elevated (6.83% as of April 17, 2025). The mortgage rate decreased 26 bps during the first quarter of 2025, though it's currently well above where it was the week before the Fed kicked off its current rate-cutting cycle (roughly 6.2% in September 2024).

S&P Global Ratings economists expect the 30-year conventional mortgage rate to fall to 6.2% by the end of 2025, up from their previous forecast of 5.5%. Should mortgage rates not fall as initially expected, this would be another headwind for home sales.

Sales of new single-family homes were up 5.1% year over year in February 2025. Meanwhile, privately owned housing starts were down 2.9%, while units authorized by building permits were down 6.8% year over year in February. If buyer activity remains muted, negative growth for RMBS securitization in 2025 will be likely.

On the other hand, if rates fall or there is a flight to quality that forces the 10-year Treasury note yield down, we could see a wave of refinancing that would lead to RMBS issuance. Moreover, there is a large number of people with very low mortgage rates secured before 2022 that are essentially in a great position financially, but also forced to hold their homes and not sell given much higher current mortgage rate. If this were to change, we could see movement in the existing home market. This upside scenario would otherwise lead to positive issuance growth in the sector.

Commercial mortgage-backed securities

U.S. commercial mortgage-backed securities (CMBS) recorded the highest issuance increase in percentage terms among all these sectors in the first quarter, as issuance soared over 140%. Significant increases were recorded in both the single-asset-single-borrower (SASB) and conduit/fusion segments, though it was more pronounced in the single-borrower space. Office, retail, and lodging property types increased the most in the first quarter.

We attribute this rebound to a resurgence of New York office SASB issuances, which headlined the active first quarter. The future demand for office space appears to be improving as several industries have scaled back their remote work mandates and pushed return-to-work initiatives, particularly in financial services and U.S. government offices.

Despite the rebound in issuance, transactions backed by office properties will continue to be the most vulnerable to credit deterioration as property valuations have declined considerably over the past several years, leading to a longer recovery. We expect significant realized losses in some office-backed SASB loans in 2025, which would hinder potential issuance growth in the space.

Due in large part to the first quarter's robust reading, we expect an increase in CMBS issuance this year, given signs of improvement in inflation readings and the expectation for further rate cuts (though there's still uncertainty about the pace and magnitude of those future cuts).

Financing Conditions Remain Sound But Fragile In Europe

Spreads in Europe compressed during the fourth quarter of 2024. Corporate yields broadly moved--the recent market turmoil led the high-yield corporate spread to widen 80 bps in only two weeks (in April), although it started from very tight levels. The move was mostly triggered by corporate yields, with benchmarks relatively stable, while still restrictive from a historical perspective.

The European Central Bank lending survey reported a small net tightening (lower than expected) of credit standards for loans/credit lines to enterprises, primarily driven by German banks on higher perceived risks related to the general economic outlook. Conditions were unchanged in France, Italy, and Spain.

The leveraged loan distressed ratio increased to 3.2% from 2.8% as of the fourth quarter of 2024 as Europe's defaults exceeded those in the U.S. in February for the first time in over two years on distressed exchanges and debt restructuring. Our base-case speculative-grade default forecast for the region is 3.75% by December 2025, higher than the long-term average of 3.1%. In our optimistic scenario, we forecast a default rate of 2.5%, and in our pessimistic scenario, a default rate of 6.25%.

Table 6

Indicators of financing conditions: Europe
	Restrictive	Neutral	Supportive	2025	2024	2023
M1 Money Supply (% change year over year)*	x			3.84	-7.88	-2.81
M2 Money Supply (% change year over year)*	x			3.45	-0.77	2.14
ECB lending survey of large companies		x		2	5	24
Yield-to-maturity of new corporate issues rated 'A' (%)	x			3.92	4.11	3.79
Yield-to-maturity of new corporate issues rated 'B' (%)	x			8.01	8.14	14.17
European high-yield option-adjusted spread (%)**			x	3.28	3.58	4.74
Underpriced speculative-grade corporate bond tranches, 12-month average (%)			x	16.79	34.2	52.22
Major government interest rates on 10-year debt	x
Morningstar European leveraged loan index distress ratio (%)		x		3.2	2.78	6.43
Data through March 31, 2025. *Through Feb. 28, 2025. European Central Bank Euro Area Bank Lending Survey for Large Firms, first-quarter 2025. **Federal Reserve Bank of St. Louis. Sources: IHS Global Insight, ECB, Morningstar LCD, and S&P Global Ratings Credit Research & Insights.

Investment-grade issuance was strong in the first quarter

Investment-grade issuance reached $269 billion in the quarter, 1.2x higher than the fourth quarter of 2024 and the third all-time high quarterly volume after only second-quarter 2020 and first-quarter 2024. Despite the 'A' and 'BBB' rating categories making up 80% of the investment-grade pool, the 'AA' category recorded the highest quarterly increase, with $34 billion. Luxembourg-based EFSF issued 6.3-year €12 billion with an average YTM of 2.7% ('AA-').

14 of the top 15 largest issuers were financial institutions. Carlsberg Breweries (consumer products) was the exception with a seven-year €4.6 billion medium-term note, largely at fixed rate (with an average YTM of 3.7%).

Speculative-grade issuance, instead, decreased to €36 billion--17% lower than the €43 billion of last quarter. The 'BB' rating category held, while the 'B' halved its market activity compared with the fourth quarter of 2024 with €10 billion. The market was not completely shut for 'CCC' issues, which totaled €531 million. Topping the speculative-grade list, UBS Group AG issued €2.9 billion of perpetual subordinated capital notes rated 'BB'.

Rated financial bond issuance increased 137% in the quarter to €227 billion. The highest increase came from the banking sector, which issued 2.5x the amount registered in fourth-quarter 2024. Rated nonfinancial bond issuance amounted to €78 billion, €9 billion higher than the fourth quarter of 2024 (an increase of 14%). Utilities (€16 billion), consumer products (€8 billion), and transportation (€7 billion) led by volume in the third quarter. By country, France and the U.K. accounted for 46% of rated issuance.

Table 7

Largest European corporate bond issuers: First-quarter 2025
Issuer	Country	Sector	Bil. €
EFSF	Luxembourg	Financial Institutions	12
Credit Agricole SA	France	Banks & Brokers	11
HSBC Holdings PLC	United Kingdom	Banks & Brokers	9.6
BNP Paribas SA	France	Banks & Brokers	8.5
Barclays PLC	United Kingdom	Banks & Brokers	8.4
Rio Tinto Finance (USA) PLC	United Kingdom	Banks & Brokers	8.2
BPCE SA	France	Banks & Brokers	7.7
ABN AMRO Bank NV	Netherlands	Banks & Brokers	6.8
Nationwide Building Society	United Kingdom	Banks & Brokers	6.4
ING Groep NV	Netherlands	Banks & Brokers	5.9
UBS Group AG	Switzerland	Banks & Brokers	5.6
Banco Santander SA	Spain	Banks & Brokers	4.7
Carlsberg Breweries A/S	Denmark	Consumer Products	4.6
Standard Chartered PLC	United Kingdom	Banks & Brokers	4.4
Societe Generale SA	France	Banks & Brokers	4.4
Sources: Refinitiv and S&P Global Ratings Credit Research & Insights.

European structured finance volume was down 19% in the first quarter on lackluster covered bond volumes.  Structured finance volume in Europe declined 19% through the first quarter of 2025, largely attributable to the decrease in covered bond issuance. Like last year, first-quarter issuance was dominated by robust increases in securitization markets, partially offsetting the broader decline.

Investor-placed securitization in the first quarter was up 66% year over year, with increases among all major asset classes. European CMBS and CLO issuance drove this increase, while ABS and RMBS saw more modest growth. Meanwhile, covered bond issuance fell roughly 46% (see chart 15).

Bank-originated issuance hit a 12-year high last year, and that strength has continued into the first quarter. We expect further bank originations this year now that banks no longer have access to central bank liquidity schemes such as targeted longer-term refinancing operations.

Furthermore, securitization as a means for banks to manage their balance sheets by selling larger portions of capital structures may also benefit deal sizes and issuance volume. However, as customer deposits have recently rebounded, it is unclear how much funding banks may need.

We expect issuance to remain elevated in 2025 but no longer expect it to reach last year's record level due to the significant decrease in covered bond issuance.

Covered bonds

European covered bond issuance slipped 46% in the first quarter following a record-setting 2023 and an elevated total in 2024 relative to most of the past decade. Covered bond issuance was down across almost every jurisdiction in the eurozone in the first quarter, with only Sweden and the U.K. exhibiting year-over-year growth.

We attribute the reduced level of issuances to pricing uncertainty stemming from covered bond spread development and the relative attractiveness of the senior unsecured market. We believe scheduled European covered bond redemptions will primarily drive issuance volumes this year as opposed to traditional benchmark covered bond issuance.

While issuance growth through the first quarter was down, covered bonds continue to be a valuable source of funding strength and diversification for banks, and central banks are typically large holders of securities, particularly during quantitative easing. In addition, covered bonds remain insulated from many global market disruptions, and the normalizing central bank policy in Europe has recently brought more issuers to the market. These factors could otherwise support healthy, albeit not record, covered

bond issuance in Europe.

Leveraged loans and CLOs

European CLO issuance reached a record $18 billion in first-quarter 2025, making it the highest quarter on record. European CLOs have benefited from greater competition and investor participation in recent years. The market's maturation has signaled a greater understanding among investors of the sophisticated nature of the transactions that have evolved CLOs from a niche investment to a more mainstream asset class. Middle-market CLOs have also begun to spread to Europe, following the trend of its U.S. counterparts.

Like in the U.S., primary issuance of leveraged loans in Europe picked up substantially last year and continued through the first quarter, up 55% year over year. CLO issuance follows the trend in leveraged loan origination volume with a lag of about four quarters. As such, we expect CLO volumes will continue to lead securitization volumes in Europe.

The spread tightening on new CLO issuance also spurred refinancing and resets of outstanding transactions. There were 29 refinancings or resets in Europe in the first quarter, compared with just 10 in the same period in 2024.

Furthermore, the long-standing gap between European CLO and U.S. CLO spreads has finally diminished. The spread differential was 39 bps in fourth quarter 2019 (peaking at 45 bps in second-quarter 2022) but fell to zero as of April 11, 2025. Post-tariff spreads remain uncertain, but should they widen as expected, this could support further European CLO issuance from a relative value standpoint.

Residential mortgage-backed securities

European RMBS issuance was up over 31% through the first quarter after nearly doubling in 2024. The jump stemmed mainly from a rise in the Netherlands, which had very little issuance during the same period last year. U.K. issuance continued to lead by volume, thanks to activity in the prime segment.

While mortgage originations in the U.K. and other European markets remain subdued, recent forecasts suggest improvements in lending growth this year across all categories as consumer demand picks up amid falling interest rates.

Asset-backed securities

European ABS also contributed to the region's increase in investor-placed securitization in the first quarter, up nearly 60% relative to last year, with consumer loan and auto loan collateralized transactions leading the way. Of note, a $7 billion dollar consumer loan issue in Belgium was a primary driver of the overall increase in the first quarter.

ABS issuance growth was also positive in German and Italian ABS. Resilient consumer spending in the eurozone has been the main driver of the region's economic growth. However, tariffs and related uncertainties may slow the pace of consumer spending activity in 2025 as consumer confidence indicators remain weak.

Commercial mortgage-backed securities

The significant increase in European CMBS issuance in the first quarter was a largely a byproduct of a low comparable base last year. First-quarter issuance increased to $1.5 billion over four issues, compared with just one $380 million issue during the same period last year.

Strong First-Quarter Totals For Emerging Markets May Be Tough To Match For The Rest Of The Year

Corporate spreads rose in April, yet remain below their 10-year average, and buoyed an increase in market activity in the region. However, they tilted 100 bps upwards in just two weeks for speculative-grade issuers, while only moderately for investment-grade companies. Benchmarks moved sideways while remaining on a tight level. Corporate yields continued to move upwards, especially at the lower end of the rated spectrum, which do not face imminent refinancing risk.

The percentage of rated speculative-grade maturities to be refinanced for the remainder of the year remains contained at 9%.

Risks to financing conditions are on the downside for months ahead. Emerging markets are particularly vulnerable to risk-off behavior from investors, and March's portfolio outflows testify for this. A tariff escalation or a hawkish stance from the Fed, implying potential lower monetary easing from local central banks, in order to preserve interest rate differentials, are two key risks to watch in the months ahead.

The first quarter of 2025 represented the highest emerging market activity since second-quarter 2021. Issuance totaled $33 billion in first-quarter 2025, up from $24 billion in the previous quarter. Similar to Europe, investment-grade issuance was entirely responsible for the increase, as speculative-grade decreased 31% to $8 billion.

From the investment-grade list, the 'A' rating category was particularly high at $10 billion, while the 'AAA' category scored its highest quarterly volume on record, with $4 billion. Topping the list, PETRONAS Capital Ltd. (a nonbank financial institution) issued 15-year $5 billion with an average YTM of 5.4% (rated 'A-').

By sector, financial issuance roughly doubled, accounting for $22 billion or 66% of the overall EM rated issuance. Nonfinancial issuance was 14% lower at $11 billion, strong in metals, mining, and steel and sluggish in transportation.

China continues to represent the lion's share of the amount (84%), largely nonrated. In the first quarter of 2025, Europe, the Middle East, and Africa issued more than Latin America, thanks to Saudi Arabia and the United Arab Emirates. Latin America had a lower contribution from Mexico and Brazil, at 55% in first-quarter 2025 against the historical average of 74%.

Table 8

Indicators of financing conditions: Emerging markets
	Restrictive	Neutral	Supportive	2025	2024	2023
High grade corporate spread (bps)*			x	104	113	178
High-yield corporate spread (bps)*			x	383	424	672
EM USD-denominated SOV benchmark yield index (%)	x			6.74	6.37	6.37
Yield-to-maturity of new corporate issues rated 'A' (%)§	x			5.28	7.12	4.6
Yield-to-maturity of new corporate issues rated 'B' (%)§	x			8.89	7.7
A' USD-denominated secondary market corporate yield (%)	x			5.15	5.37	5.2
B' USD denominated secondary market corporate yield (%)	x			9.47	9.5	12.21
Data through March 31, 2025. Source: PriceViewer. *Federal Reserve Bank of St. Louis. §S&P Global Ratings Credit Research & Insights.

Table 9

Largest emerging markets corporate bond issuers: First-quarter 2025 rated issuance
Issuer	Country	Sector	(Bil. $)
Petronas Capital Ltd	Malaysia	Financial Institution	5
AIIB	China	Banks	3.8
SESPC	Saudi Arabia	High Technology	2.8
Codelco	Chile	Metals, Mining & Steel	1.5
New Development Bank	China	Banks	1.2
YPF SA	Argentina	Broker	1.1
Turkcell Iletisim Hizmetleri	Turkey	Telecommunications	1
El Puerto de Liverpool SAB	Mexico	Retail/Restaurants	1
CII	Mexico	Broker	1
RAK Capital	U.A.E.	Broker	1
Minera Mexico SA de CV	Mexico	Metals, Mining & Steel	1
Export-Import Bank of India	India	Banks	1
BADEA	Sudan	Broker	0.8
Bank of the Philippine Islands	Philippines	Banks	0.8
PT Bank Mandiri (Persero) Tbk	Indonesia	Banks	0.8
Sources: Refinitiv and S&P Global Ratings Credit Research & Insights.

Table 10

Largest emerging markets corporate bond issuers: All first-quarter 2025 issuance
Issuer	Country	Sector	Bil. $
Agricultural Bank of China Ltd	China	Banks & Brokers	13.7
Agricultural Dvlp Bk Of China	China	Banks & Brokers	10.7
State Grid Corp Of China	China	Utility	9.5
Industrial & Coml Bk of China	China	Banks & Brokers	6.9
China Construction Bank Corp	China	Banks & Brokers	5.5
China State Railway Grp Co	China	Transportation	5.5
Bank of Beijing Co Ltd	China	Banks & Brokers	5.1
Petronas Capital Ltd	Malaysia	Financial Institution	5
The Export-Import Bk of China	China	Banks & Brokers	4.3
AIIB	China	Banks & Brokers	4.2
China CITIC Bank Corp Ltd	China	Banks & Brokers	4.1
Postal Svgs Bk of China Co	China	Banks & Brokers	4.1
Ping An Bank Co Ltd	China	Banks & Brokers	4.1
China Minsheng Bkg Corp Ltd	China	Banks & Brokers	4.1
China Development Bank	China	Banks & Brokers	3.8
Sources: Refinitiv and S&P Global Ratings Credit Research & Insights.

International Public Finance Sets New First-Quarter Record

IPF issuance reached a record $1.35 trillion in 2024, with $762 billion in the second half of the year. That strong momentum continued into first-quarter 2025, with $374.4 billion in issuance--a new first-quarter record for the sector.

Issuance out of China reached a whopping $276 billion in the quarter, accounting for 74% of the total. We believe much of this total stems from special refinancing bonds designed to replace other types of debt, such as between local and regional governments and their financing vehicles. Germany was a distant second place, with $34 billion in issuance, but this represented a 40% increase over first-quarter 2024.

Data on non-U.S. public finance volume isn't reliable for determining the true amount of overall borrowing, but these numbers can still point to major trends. In the four years prior to 2020, issuance was extremely high (over $630 billion per year on average). In 2020, issuance exceeded $1 trillion for the first time, and international public finance has since remained a $1 trillion bond issuance market, with growth every year except in 2022.

Structured finance issuance growth outside of the U.S. and Europe fell 2%

Structured finance issuance outside of the U.S. and Europe decreased 2% in the first quarter. There were declines in nearly every region, but trends were mixed across subsectors--the exceptions were Australia and New Zealand securitizations and covered bonds and Canadian ABS.

Australian RMBS led issuance volumes in the region, with approximately $13 billion in issuance, representing 70% growth through the first quarter relative to the corresponding period last year. We attribute this growth to strong macroeconomic fundamentals in Australia. Inflation remains between the central bank's 2%-3% range and labor markets remain tight. Interest rates were cut for the first time in four years in February, with another penciled in for May and more likely to come. This bodes well for mortgage borrowers and those looking to refinance their existing terms.

Additionally, more nonbanks are originating self-managed superannuation fund loans to diversify their portfolios, and they're becoming more prominent in Australian RMBS transactions. Meanwhile, covered bond issuance in the region saw the largest year-over-year increase in percentage terms during the first quarter, tripling first-quarter 2024's tally at nearly $5 billion.

The ABS sector also contributed to the region's overall growth through the first quarter, up over 30%. This sector has gained a significant share of securitized volume over the past few years, and we believe it will continue in 2025 as the strains on consumers--such as high interest rates and persistent inflation--continue to ease. Like elsewhere in the world, any international developments, particularly those on trade, will be in focus should any material interruptions to Australian activity and smoothing inflation occur. New asset classes that have become increasingly common in the U.S. over the past few years--like data center ABS--might also contribute to issuance growth in 2025.

In Latin America, structured finance is becoming more common as a funding tool for digital infrastructure, energy, fintech, and transportation needs in the region. Higher ratings can be achieved using structured finance instruments rather than being capped by the sovereign rating. Brazil continues to lead issuance in the region, though Mexico and Argentina may contribute a growing share.

Furthermore, some asset classes not seen in the U.S., such as future flow, repack, and cross-border transactions, help transfer convertibility risk in the region, and investor demand remains stable for these asset types.

Some sectors outside the U.S., Europe, and Australia had little to no structured finance issuance in the first quarter, such as CMBS and structured credit. Although, these asset classes have never represented a meaningful share of issuance from outside the U.S. and Europe.

There was also a cutback of nearly two-thirds in covered bond issuance in first-quarter 2025 outside of the U.S. and Europe following the trend exhibited last year because there had been atypically large amounts of covered bond issuance from some countries in recent years. Covered bond issuance was spread across Canada, Korea, and New Zealand in the first quarter.

We believe covered bond issuance outside the U.S. and Europe will continue to be tempered in 2025, partly due to the lackluster volumes through the first quarter. It should also improve if interest rates and inflation continue to fall and labor markets remain tight.

Related Research

• Global Credit Conditions Special Update: Ongoing Reshuffling, April 11, 2025
• Global Economic Outlook Q2 2025: Spike In U.S. Policy Uncertainty Dampens Growth Prospects, March 27, 2025
• Economic Outlook Asia-Pacific Q2 2025: U.S. Tariffs Will Squeeze, Not Choke, Growth, March 26, 2025
• Economic Outlook Eurozone Q2 2025: A World In Limbo, March 25, 2025
• U.K. Economic Outlook Q2 2025: Recovery In Consumption Slows As Inflationary Pressure Returns, March 25, 2025
• Economic Outlook Emerging Markets Q2 2025: Trade Policy Unknowns Dampen Investment, March 25, 2025
• Economic Outlook U.S. Q2 2025: Losing Steam Amid Shifting Policies, March 25, 2025

Credit Research & Insights:	Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@spglobal.com
	Zev R Gurwitz, Albany + 1 (212) 438 7128; zev.gurwitz@spglobal.com
	Brenden J Kugle, Englewood + 1 (303) 721 4619; brenden.kugle@spglobal.com
	Luca Rossi, Paris +33 6 2518 9258; luca.rossi@spglobal.com