The UK has overtaken the US as the leading global centre for international bond issuance accounting for 30 per cent of the global total during 2008.
The figures are revealed today by the Bond Markets 2009 Report issued by International Financial Services London (IFSL), the independent organisation promoting UK financial services worldwide.
With the total of $718bn in international bonds issued in the UK in 2008 constituting a rise of 42 per cent on 2007, IFSL also estimates that London accounted for around 70 per cent of secondary trading in international bonds. Globally, international bond issuance fell 19 per cent in 2008 to $2.4 trillion while amounts outstanding increased 5 per cent to $23.9 trillion.
Sir Stephen Wright, Chief Executive at IFSL, said: “London has cemented its position as the leading global centre for international bond trading. Coming at a time when more and more companies are seeking direct access to the capital markets as a means of counteracting the scarcity of bank debt finance, it is clear that London will continue to meet a large part of global business’s requirements for capital as the global economy begins to recover from recession”.
The report also reveals that overall amounts outstanding in bond markets increased by 6 per cent in 2008 to $83 trillion. Nearly three quarters (71 per cent) of this total was accounted for by domestic bond markets, with international bonds making up the remaining 29 per cent.
Meanwhile a rise in risk averse investor behaviour since the start of the credit crisis has raised investment in government bonds, particularly US Treasuries. The cost of bond market finance for companies and banks increased as yields on corporate bonds rose. After a subdued 2008, corporate bond issuance reached record levels during the first quarter of 2009, particularly in Europe, where issuance of investment grade corporate bonds reached a record €140bn, well above quarterly levels of less than €50bn seen in recent years.
Marko Maslakovic, Senior Economist at IFSL, said: “There are now clear signs that Europe is moving towards a more US-style bond market as companies there diversify away from reliance on banks for funding.
The demand for corporate bonds is being driven by the appetites of institutional and retail investors enticed by higher returns over government bonds. Unlike in the US, corporate bond issuance in Europe remains limited to companies with the best credit ratings.”
The Bond Markets 2009 Report also reveals that:
The figures are revealed today by the Bond Markets 2009 Report issued by International Financial Services London (IFSL), the independent organisation promoting UK financial services worldwide.
With the total of $718bn in international bonds issued in the UK in 2008 constituting a rise of 42 per cent on 2007, IFSL also estimates that London accounted for around 70 per cent of secondary trading in international bonds. Globally, international bond issuance fell 19 per cent in 2008 to $2.4 trillion while amounts outstanding increased 5 per cent to $23.9 trillion.
Sir Stephen Wright, Chief Executive at IFSL, said: “London has cemented its position as the leading global centre for international bond trading. Coming at a time when more and more companies are seeking direct access to the capital markets as a means of counteracting the scarcity of bank debt finance, it is clear that London will continue to meet a large part of global business’s requirements for capital as the global economy begins to recover from recession”.
The report also reveals that overall amounts outstanding in bond markets increased by 6 per cent in 2008 to $83 trillion. Nearly three quarters (71 per cent) of this total was accounted for by domestic bond markets, with international bonds making up the remaining 29 per cent.
Meanwhile a rise in risk averse investor behaviour since the start of the credit crisis has raised investment in government bonds, particularly US Treasuries. The cost of bond market finance for companies and banks increased as yields on corporate bonds rose. After a subdued 2008, corporate bond issuance reached record levels during the first quarter of 2009, particularly in Europe, where issuance of investment grade corporate bonds reached a record €140bn, well above quarterly levels of less than €50bn seen in recent years.
Marko Maslakovic, Senior Economist at IFSL, said: “There are now clear signs that Europe is moving towards a more US-style bond market as companies there diversify away from reliance on banks for funding.
The demand for corporate bonds is being driven by the appetites of institutional and retail investors enticed by higher returns over government bonds. Unlike in the US, corporate bond issuance in Europe remains limited to companies with the best credit ratings.”
The Bond Markets 2009 Report also reveals that:
- The nominal value of bonds outstanding of UK-based issuers increased 43 per cent to a record level of £3,221bn at the end of 2008. This in pound terms owed largely to the fall in the value of the pound versus the US dollar during 2008, combined with the majority share of foreign currency denominated bonds in the UK bond market.
- UK Government net debt issuance, below £50bn in recent years, increased to £126bn in the financial year 2008/09 and is likely to range between £150bn and £200bn in the next three years. The contribution to public sector net debt from financial sector interventions since the start of the credit crisis is £134bn.
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