The European credit markets have broken both issuance and performance records in 2009, according to the cross-asset research team at Société Générale.

Investment grade credit indices have returned over 16% so far this year, SocGen’s analysts report, while there has been a record €251 million of issuance by non-financial corporates, around €150 billion in senior unguaranteed financial debt and around €145 billion in guaranteed bonds.

The spreads on most iBoxx corporate debt indices over representative government benchmarks have contracted dramatically in 2009, as the table below shows.

SocGen’s analysts expect overall corporate fixed income supply to decline by 30% in 2010 and spreads to tighten by a further 50%, helping investment grade indices to return 5%.