Issuance of global debt at record low
Bond issuance by banks is at its lowest level in a decade, underlining the impact that new regulations and the euro-zone debt crisis are having on the way financial institutions operate.
Global debt issuance by banks stands at $1.26 trillion – the lowest since 2002 – according to figures from Dealogic, the data provider.
The amount of senior unsecured debt, a mainstay of bank funding, is at its lowest since 2003.
Issuance of covered bonds – debt secured against pools of loans that carries an additional bank guarantee – has also fallen, and the total raised via asset-backed securities continues to be a fraction of pre-subprime crisis levels. The main drag on issuance came from Europe, where banks raised just $639 billion in debt capital markets, the lowest in 10 years.
By contrast, banks in the US issued more debt than last year, and Asian banks raised $307 billion, the highest annual issuance since Dealogic started tracking the data in 1995.
Northern European banks have maintained access to public debt markets through much of the year, but, with worries over the future of the euro zone influencing investor demand, many lenders hit their 2012 funding needs at the start of the year. Action by central banks has heavily influenced issuance levels.
Issues from Spanish, Italian and, more recently, Portuguese and Irish banks have seen strong investor demand since the European Central Bank reassured investors that a backstop was in place to shore up the euro zone. – (Copyright The Financial Times Limited)