The European Credit Strategist: “We meet again, Mr. Bond”

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The European Credit Strategist: “We meet again, Mr. Bond”

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The European Credit Strategist

“We meet again, Mr. Bond”

Credit Analysis

Rising real rates challenging consensus longs 24 July 2026

July means big rotations, but not a big retreat from risk assets. The march higher in Credit Strategy

global real yields is causing consensus longs (semis, Kospi, EM stocks) to stumble. And Europe

outperformance instead is coming from energy, global bank stocks and UK small-caps. In Barnaby Martin

credit, leadership is changing fast too. Charts 2-4 show that the auto sector currently Credit Strategist

has the best 5yr total return across IG non-financials. And in high-beta credit, leadership MLI+44 (UK)20 7995 0458

has swung from AT1s to single-Bs now, driven by the surprise rally in chemical credits. barnaby.martin@bofa.com

Ioannis Angelakis

Growing up is hard to do CreditMLI (UK)Derivatives Strategist

Hyperscalers are witnessing some of the fastest relative growth rates ever seen by a ioannis.angelakis@bofa.com

credit sector (chart 5). Faster than telcos 25yrs ago, faster than energy in 2017 and Mohit Agarwalla

faster than real estate in 2022. Yet, growing up is never easy to do in the corporate bond CreditMLI (UK)Strategist

market. Today, hyperscaler spreads are wider than overall Euro IG spreads for the first mohit.agarwalla@bofa.com

time ever; prices for some long-dated hyperscaler bonds issued this year are already

below 90c; and just 11% of hyperscaler bonds are tighter than their launch spread.

Recent Credit Strategy publications:

The hyperscaler playbook

Next week will see a flurry of hyperscalers reporting. All eyes will be on reported capex Credit Strategy 2026 Primer

numbers, and any commentary on capex outlooks. Upside capex surprises would likely