Positive start to the year in the credit market, despite turbulence

The credit markets have started the 2025 financial year with great dynamism and a marked bullish tone, with high supply volumes and strong investor appetite. All of this is happening within a context characterised by high geopolitical uncertainty, the implementation of Trump's new policies and the elections in Germany, which the market has had to process.

Following a short first week of the year due to holidays, offerings accumulated, resulting in nearly €42 billion in bonds being issued on January 7, breaking records for the largest volume issued and number of issuers registered in a single day in Europe.

Expectations of interest rate cuts by major central banks in 2025 have driven a start to the year characterised by investor appetite and a risk-on tone that has increased the appeal of longer duration and higher beta assets. However, U.S. data in January revealed a strong labour market and persistent inflation that called into question the Federal Reserve’s future rate cuts. In Europe, despite better economic activity data, price levels remained controlled and growth prospects were revised downwards for countries like Germany and France. Thus, a divergence between monetary policies on each side of the Atlantic has become apparent, along with a shift towards protectionist policies. Trump has announced his first tariffs on imports from Mexico, Canada and China, generating particularly volatile sessions.

CaixaBank's CIB Debt Capital Markets team: Javier Pereira, Miguel Lafont, Enrique Riber, Antonio Sanz-Pastor, Natalia García, Fernando Cuesta, Mónica Ferrari, Carlos Herrero, Luis Pérez, Rémi Arias, Cristina Luzón and Iñigo de las Cuevas.

Since the end of January, most weeks have been marked by volatility, affecting stock markets more than credit markets. The first shock was caused by the emergence of Chinese Artificial Intelligence company DeepSeek, which has threatened U.S. technological dominance. This was followed by the results of technology's ‘Magnificent 7’ which, while beating expectations, have left much to be desired in terms of their future earnings expectations. Concerns about the sector and fears of recession due to tariff policies continued to roil stock markets in March, marking the worst sessions since 2022, when war broke out in Ukraine.

In Europe, Germany held an election on 23 February, with no significant increase in volatility during the campaign weeks. However, following the U.S. president's first meetings with Russian and Ukrainian leaders to end the conflict in Ukraine, and the confrontation between Trump and Zelensky, the signing of a ceasefire between the two countries could be accelerated, which could become a ‘white swan’ or positive catalyst. In addition, the withdrawal of US support for Ukraine has accelerated the need to establish a joint European defence policy, leading Germany and the EU to finalise various special state spending rearmament funds for infrastructure and defence along with a relaxation of fiscal rules to free up to €650 billion of national defence spending over the next four years and create a €150 billion fund to finance joint defence needs. These announcements, particularly the German proposal, led to the largest one-day increase in German bond yields (+30 basis points) since the fall of the Berlin Wall, again generating high volatility. Meanwhile, credit reacted with spreads widening, albeit modestly, and recovered in subsequent sessions, returning to near the lows of the year. 

Despite the occasional volatile session, trading continued to be successful even on these volatile days. By the end of February, the cumulative volume issued in euros for the year exceeded €460 billion, reaching the levels of 2024, a record year.

Strong start to the year for CaixaBank in Investment Grade Corporates, ESG and Autonomous Regions  

The Debt Capital Markets team withing CaixaBank’s Corporate & Investment Banking (CIB) offer has started the year reaffirming its leadership in the Spanish market, spearheading the Investment Grade Corporate debt, Sustainable Corporate debt and Autonomous Regions debt segments. At the international level, CaixaBank also played a leading role in some of the most significant transactions on the European trading floor.

In the Autonomous Regions segment, CaixaBank's CIB Debt Capital Markets team coordinated the first transaction of the year: a sustainable €1 billion, 10-year bond issued by Madrid. This operation marked a milestone for the issuer, achieving its lowest spread on a bond at this maturity, with only 11 basis points spread over the Spanish Treasury bonds.

On corporate issuers, Ferrovial's €500 million, 5-year bond placement, which featured a two-day virtual roadshow reaching around 60 investors and which enabled a successful operation characterised by its dynamism and with a demand exceeding €4 billion—eight times the initial offering—and achieving a negative issuance premium below its secondary level.

Another key domestic issue was Inmobiliaria Colonial's return to the debt market after its last appearance in 2021. Colonial held a 2-day virtual roadshow, reaching around 100 investors. This transaction, Spain's first green-format corporate issuance of the year, stood out for achieving the largest narrowing in a corporate issue in the European corporate bond market in January, a month in which 43 bonds were issued.

Additionally, CriteriaCaixa successfully tapped the market with a €500 million, 6-year bond, marking its highest-demand operation and lowest new issuance premium in history (a book 7 times oversubscribed and a negative premium of 2.5 basis points).

On the international stage, CaixaBank's CIB Debt Capital Markets team highlights ‘the trust placed in us by foreign electric utilities. Our recurring participation in sustainable format issues within the domestic electricity sector has led EDP, Enel and Hera to rely on our expertise for the execution and success of their operations’. Notable among these was Italy’s Hera green format issue, pioneering the new EU Taxonomy, and the SLB operation by Italy's Enel, for a total of €2 billion, in three tranches, with coupons linked to compliance with sustainability objectives, one of the largest operations carried out by a European issuer in 2025.