How long can, may and will the banks continue to meet the entire demand for credit in the economy? This question is becoming increasingly urgent. Firstly, as the 2024 annual reports also suggest, the banks' refinancing costs have risen sharply.

Overall, interest income is not keeping pace with interest expenses. So if banks want to grant corporate loans, they have to pay more than they did a year ago to raise the necessary funds on the market. They either pass on the additional costs to the loan customer or bear the loss themselves. And another favorable source of refinancing, customer deposits, is no longer flowing as strongly as it did a year ago. Secondly, the regulatory requirements (Basel III final) are further restricting the lending capacities of some banks.

Swiss Corporates Are Making Intensive Use of the Bond Market

However, there is a tried-and-tested alternative to bank loans for companies - at least if they are of a certain size: the bond market. According to a recently published study by rating agency Moody's, Swiss companies raised 65 billion francs there in 2024, an increase of 21 percent compared to 2023.

Although the increase was even more pronounced in other countries last year, the primary market in Switzerland has proven to be more stable over the past three years in a difficult global environment, the analysts note.

If Things Get More Difficult: Back to the Swiss Franc Bond Market

Moody's betrachtet dabei allerdings nicht nur den Frankenanleihenmarkt, sondern Emissionen von Schweizer Corporates in allen Währungen. Durchschnittlich würden Schweizer Unternehmen zwei Drittel ihres Finanzierungsbedarfs in Dollar und Euro decken, der Anteil der Heimwährung erreichte im schwierigen Jahr 2022 mit 40 Prozent einen Höchststand und betrug 2024 28 Prozent. Moody's schreibt weiter, dass eine Handvoll grosser Unternehmen, die Investment Grade (Anlagequalität) aufweisen, den Markt 2024 dominiert haben und auch weiterhin dominieren werden. 

However, companies that are not in the league of Roche, Nestlé, Novartis & Co are more oriented towards the domestic currency market. Issuing activity there is traditionally particularly strong in January. This was no different in 2025, when a total of 69 transactions were recorded in the first month, with domestic borrowers accounting for the lion's share at just under 8 billion francs.

Successful Start to the Year on the Domestic Primary Market

However, according to Zürcher Kantonalbank (ZKB), which is itself active in the business as the lead manager, activity on the primary market was also brisk in February. A total of 37 issues worth 7.3 billion francs were launched; this time, domestic and foreign borrowers practically balanced each other out in terms of amount.

Unlike in January, Swiss companies (corporates) were in short supply in February. The only classic corporate was Bell Food Group, a debtor rated triple B by ZKB and UBS, which raised 220 million francs.

Financial Borrowers Dominate

Financial borrowers (financials) were well represented: from the two regulars Pfandbriefzentrale and Pfandbriefbank (another important source of refinancing for banks) to EFG Bank and cantonal banks. Here, the Additional Tier 1 bond issued by Luzerner Kantonalbank (LUKB) stood out, with which - as finews.ch put it - it broke the spell in this segment (which would not even exist without the avalanche of regulation following the financial crisis).

But back to the companies. March did not get off to a bad start on the Swiss primary market. Sika and Clariant raised a total of 500 million and 265 million francs respectively via various bond tranches.

Record Issuance by Swiss Compnanies – but in what Curreny?

And the prospects that 2025 will be a good year for the Swiss corporate debt segment are good, at least if the analysts at Moody's are right - who, as mentioned, also include issuing currencies other than the Swiss franc.

The rating agency is expecting a record number of new issues from domestic corporates, i.e. the volume of 65 billion francs from the previous year is expected to be exceeded.

Massive Maturitiess

However, analysts do not attribute this to the fact that companies are increasingly replacing maturing bank loans with bonds, but rather to the many bonds that are already outstanding but will soon expire and need to be refinanced. The figures are 30 billion francs for 2025 and 35 billion francs each in 2026 and 2027.

This refinancing effect is likely to weaken again in the coming years because companies are increasingly issuing bonds with a longer term, which will lead to fewer maturities and therefore repayments.

The Magic Word «Capital Market Viability»

For Swiss companies that are not in the top league, which can choose the issuing currency and lead manager more or less at will, the domestic capital market offers an alternative worth considering in times when banks are tightening lending conditions.

Forward-looking CFOs should be aware that «capital market viability» is more than just a buzzword. And that experience shows that the domestic market for companies with a solid credit rating remains open the longest in times of crisis.

But even for those who want to know whether there is meat on the bone of the thesis that Swiss companies could tend to replace bank loans with bonds, it is worth taking a particularly close look at developments on the Swiss franc bond market over the next few months.