Credit Markets Are Quietly Rewiring Themselves

If you’ve been watching the credit markets in 2025, you’ve probably noticed something strange: they look calm on the surface, almost boring, while the rest of the financial world feels volatile and noisy. But beneath that calm, some important shifts are taking place.

Goldman Sachs’ Jonny Fine recently pointed out something that caught my attention — corporate bond issuance has exploded this year. We’re talking about $1.5 trillion worth of investment-grade debt issued in just six months across the U.S. and Europe. That’s not just big. That’s historic.

And yet… spreads remain at their tightest levels in 25 years. Demand is so strong that the market is basically absorbing everything issuers throw at it. Investors are still desperate for safe, steady yields — even if it means locking into historically low risk premiums.

 

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But here’s the kicker: a lot of that action is no longer just in the U.S.

Europe Is Grabbing Market Share

Traditionally, the U.S. dollar bond market has been the king of the hill. If you wanted depth, liquidity, and scale, you went to New York. But in Q2 this year, 40% of new investment-grade issuance happened in euros.

That’s a real shift. Europe isn’t just a sideshow anymore — it’s becoming a magnet for global credit. Companies are clearly comfortable raising money there, and investors are showing they’ll buy it.

This raises some fascinating questions:

Is Europe on its way to becoming the preferred market for certain issuers?

Could global capital flows start tilting more heavily toward Frankfurt and Paris instead of Wall Street?

And what does this mean for currency exposure and hedging strategies for big investors?

Why This Matters for Us as Investors

Here’s my take: this isn’t a short-term quirk. With euro issuance gaining ground, investors who ignore European credit might miss an important structural shift. The U.S. will always be a heavyweight, but diversification isn’t just about sectors — it’s about markets too.

It also tells me something bigger: capital always finds its balance. When spreads are tight and supply is massive, markets don’t crack — they adapt. Right now, that adaptation looks like Europe taking on a bigger role in global credit.

The Calm Before… Something?

The phrase that stuck with me was “oasis of calm.” That’s what the U.S. and European investment-grade markets look like today. But history tells us: oases don’t stay untouched forever.

For now, investors can enjoy the calm. But smart investors will also prepare for the moment when this calm ends — because spreads this tight rarely last forever.

That’s my read on where credit markets are heading. For me, the key takeaway is simple: don’t just watch the U.S. bond market. Watch Europe. That’s where the quiet rewiring of global credit is happening right now.