Following signals from U.S. President Donald Trump indicating an impending end to the Iran conflict, credit risk indicators declined, prompting companies to accelerate bond issuances in the European market. Market data shows that at least €21 billion (approximately $24 billion) worth of bonds are set to be priced in Europe on Tuesday, marking the busiest trading day since the outbreak of Middle East tensions last week. Since the conflict began, soaring credit risks led many borrowers to postpone market entry, resulting in a backlog of bond issuance deals. The current market reaction reflects a concentrated release of this pent-up demand.
According to informed sources, automaker Stellantis NV (STLA) is advancing its first dual-currency hybrid bond issuance in euros and pounds, structured in three parts. This marks the first hybrid bond transaction since before the Middle East conflict erupted. Such high-risk debt, which combines characteristics of both bonds and equities, is often treated as "partial equity" by credit rating agencies. McDonald's Corporation (MCD) has simultaneously launched a €1 billion bond sale plan. Additionally, other entities such as Royal Schiphol Group NV and South Eastern Power Networks Plc are also proceeding with their bond issuance plans.
Beyond strong corporate bond performance, sovereign and supranational issuers have injected significant liquidity into the market. The European Union and the UK government both launched large-scale pricing transactions on Tuesday, contributing to the busiest trading day in the European bond market since Middle East tensions escalated. Specifically, the EU plans to issue €9 billion in bonds, while the UK is offering £6.25 billion (approximately $8.4 billion) in green gilts.
President Trump's remarks about the imminent end of the Iran conflict significantly boosted global market risk appetite, driving the cost of credit default swaps (CDS) for European investment-grade corporate portfolios to their largest single-day decline since June. Traders reported that CDS prices for Asian investment-grade bonds also fell by 4 basis points, reflecting market optimism about easing geopolitical risks.
Market attention is currently focused on Stellantis Group's hybrid bond transaction dynamics. The automaker has faced ongoing operational pressures in recent months, with its stock price declining 35% year-to-date. Current CEO Antonio Filosa is adjusting strategic direction, seeking to divest from unprofitable electric vehicle investments made by previous management to optimize capital allocation and alleviate financial pressure.
This wave of bond activity has restarted what was expected to be a busy issuance month. Data shows global financing volume reached a record $1.5 trillion in the first two months of the year, driven primarily by tech companies' mega-deals and strong investor demand. Market participants had maintained cautious expectations for the week, awaiting further clarity on Middle East developments. According to a European bond issuance survey released Friday, respondents anticipated total bond issuance between €15 billion and €30 billion for the week.
With shifting market sentiment, junk-grade transactions have also become active. Median Group became the first company to issue a Class B term loan since the conflict began. The mental health and adult care-focused enterprise plans to extend the maturity of its euro and pound-denominated loans by three years to 2030, with commitment dates set for March 12.