As vaccination rates have been steadily increasing and allowing social and economic life to gradually return to normal, Europe's economic activity is recovering. Rising energy prices and freight costs, as well as supply bottlenecks, are disrupting global supply chains and driving up raw material prices and inflation higher. Following the quieter summer months, European debt markets saw more activity in September. This shows that, despite inflation expectations, the market was not expecting a tightening of financing conditions and consequently did not find massive frontloading of issuance necessary. In Q3 2021 financing conditions remained highly favourable for borrowers. However, given the current rise in inflation, market participants will most likely face higher interest rates over the upcoming quarters.
