The Low Expected Net Supply of Credit Is a Potential Tailwind for 2024

“Supply creates its own demand.”

– Jean-Baptiste Say

Forecasts of low net supply of corporate and securitized debt this year could be a tailwind for U.S. credit performance. While gross issuance of credit is forecast to remain stable in 2024, a wave of redemptions and refinancings could suppress net issuance, with an average forecast of around $639 billion (corporate: $550 billion and securitized: $89 billion) of net issuance in 2024, just 4% of total corporate and securitized debt outstanding. That would be the lowest net issuance since 2011 and less than half the average annual issuance of 2012 to 2022.

Bottom line: The low expected net supply of new credit combined with high all-in yields across the credit universe could provide interesting opportunities in fixed income, especially across corporate and securitized credit.