Global bond market up 5% in 2010 to record $95 trillion - more than two-thirds the size of equity market

The global value outstanding of bonds totalled a record $95 trillion at the end of 2010, up 5% on the previous year. The figures are revealed today in our Bond Markets 2011 report. Domestic bonds accounted for 70% of the total and international bonds for the remainder.

As a proportion of global GDP, the bond market increased to 130% in 2010 from 119% in 2008 and 80% a decade earlier. The considerable growth means that at the end of 2010 it was much larger than the global equity market which had a market capitalisation of around $55 trillion. Growth of the market since the start of the economic slowdown was largely a result of an increase in issuance by governments, with government bonds accounting for 43% of the value outstanding at the end of 2010, up from 39% a year earlier.

The corporate bond market remained strong in 2010 following on from the rally in 2009. Book-runners’ deal volume from global debt capital markets totalled $6.05 trillion in 2010, down 2% from the previous year but nearly 40% up on the volume two years earlier.

Marko Maslakovic, Senior Manager, Economic Research said:

“The slow pace of book-runners deal volume in Europe during 2010, partly a result of the government finance crisis in some countries, was largely offset by an increase in activity in the US. Europe’s corporate bond markets remain less developed than in the US, but are likely to expand as companies diversify sources of funding.”

The outstanding value of international bonds increased by 3% in 2010 to $28 trillion. The $1.5 trillion issued during the year was down 35% on the 2009 total. The first quarter of 2011 was off to a strong start with issuance of nearly $500bn. The US was the leading centre in terms of value outstanding with 24% of the total followed by the UK 13%. London remains the leading centre for international bond trading with an estimated 70% of secondary market turnover.

The value of bonds outstanding of UK based issuers totalled a record £3,440bn in 2010, up 3% on the previous year. International bonds accounted for more than 70% of this. Excluding financial interventions, UK public sector net debt grew by 19% in 2010/11 to £905bn or 60% of GDP. This is projected to rise to 71% by 2013/14. Including financial sector interventions, net debt stood at £2.4 trillion.