In early 2023, we saw bond issuance volumes picking up amid repayments of the amounts borrowed under the targeted longer-term refinancing operations and banks' efforts to increase or maintain buffers on their minimum requirements for own funds and  2/4  BIS - Central bankers' speeches  eligible liabilities (MREL). But bond funding costs have also risen markedly since the start of 2022.
A faster repricing of deposits, on the back of heightened competition, would increase funding pressures even further. While NPLs are at record lows, default rates on banks' corporate credit exposures started to increase in the second half of 2022 and early warning signals of future asset quality deterioration have become more pronounced.