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Alternative Market Briefing

Global bond issuance to fall by 9% in 2020 due to the COVID-19 pandemic

Thursday, April 30, 2020

Laxman Pai, Opalesque Asia:

Global bond issuance is likely to fall about 9% in 2020 from last year across all sectors due to the COVID-19 pandemic and subsequent economic slowdown.

According to a report from S&P Global Ratings, bond issuance from financial services companies, specifically, are likely to fall 1% to 5% in 2020 from 2019.

S&P expects nonfinancial issuance to contract by 7%-14% in 2020 and the global structured finance issuance to decline by roughly 25% in 2020.

However, global new bond issuance in the first quarter of 2020 totaled $1.9 trillion, up 6.4% relative to the first quarter of 2019. Some sectors saw large increases, such as industrials (up 17.3%) and U.S. public finance (up 13.1%); while others saw declines, like international public finance (down 12%), and structured finance (down 4.3%).

In most cases, issuance totals were quite strong in January, and even February; however, most regions and sectors saw large declines in March as the spread of the coronavirus reached pandemic portions.

After starting the year on solid footing following the signing of phase 1 of the U.S.-China trade agreement, financing conditions had collapsed globally with the outbreak of COVID-19 and the economically harsh containment measures enacted to stem the growth of the virus.

This, when combined with the recent surge in oil supplies, has pushed the global economy into a recession, which S&P Global economists expect to last through the second quarter. Giv......................

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