Global Credit Trader: The Hybrid Renaissance

The global hybrid debt market is experiencing significant momentum in 2026, with both USD and EUR markets seeing record-breaking supply. Investors are increasingly turning to hybrids for their incremental spread premium compared to traditional senior debt.

Key Takeaways

• 1.Hybrid debt issuance has accelerated in 2026, with USD market on track to set a new record.
• 2.USD hybrids offer an attractive spread premium (avg 61bp vs BBBs) in a tight spread environment.
• 3.EUR hybrid market is more mature; view is more cautious with a focus on higher-quality issuers.

Table of Contents

• The Hybrid Renaissance
• Hybrid supply: On pace to set new records, especially in the EUR market
• The drivers of hybrid issuance and investment
• Placing the growth of the hybrid market (across regions) in context
• Assessing relative value—with some important caveats
• Performance: Solid (despite recent growth) for USD hybrids and range-bound for EUR
• Hybrids generally trade structure risk for quality risk
• Quantifying the compensation for subordination
• Forecast dashboard: Spreads, returns, issuance, defaults, and ratings migrations
• Forecast dashboard: Relative value views
• Performance dashboard: Cash and synthetic markets
• Performance dashboard: Sectors
• Performance dashboard: Bond-level dispersion
• Relative value dashboard: Excess spreads in the USD and EUR markets
• Performance dashboard: Biggest movers in the USD bond market
• Valuation dashboard: Percentile ranks for spreads and yields
• Valuation dashboard: Sizing the carry in USD and EUR fixed income markets
• Valuation dashboard: Macro index volatility
• Valuation dashboard: CLOs
• USD IG and HY Sentiment indicators
• Microstructure dashboard: Top 20 most traded capital structures in the USD IG and HY markets
• Microstructure dashboard: Liquidity conditions in the USD secondary bond market
• Flow dashboard: Mutual fund and ETF AUM
• Flow dashboard: Mutual fund and ETF flows
• Flow dashboard: Upcoming coupon and principal payments
• Flow dashboard: Positioning in macro indices
• Flow dashboard: ECB QT
• Foreign demand and hedging cost
• Primary market dashboard: USD gross issuance
• Primary market dashboard: EUR gross issuance
• Primary market dashboard: Use of proceeds
• Primary market dashboard: Net issuance
• Primary market dashboard: AI-related issuance for the USD and EUR markets
• M&A volume
• M&A volume (Strategic deals only)
• Primary market dashboard: CLO creation and refinancing
• Primary market dashboard: Maturity walls
• Fundamental dashboard: Credit metrics for US non-financial corporations
• Fundamental dashboard: Credit metrics for European non-financial corporations
• Default and ratings migration dashboard: Default trends
• Default and ratings migration dashboard: Upgrades and downgrades