More NewsCorporate Bond Issuance in 2014 Still Strong, but Lags Last Year’s Levels

Corporate Bond Issuance in 2014 Still Strong, but Lags Last Year’s Levels

Global corporate new bond issuance has been robust in the first five months of 2014, totaling US$1.5 trillion, but remains lower than the nearly US$1.6 trillion issued during the same period in 2013, reports Standard & Poor’s (S&P) Capital IQ.

The credit ratings agency (CRA) said that last month US$320bn in new corporate bonds came to market, following the US$301bn issued in April 2014 and US$347bn issued in March.

Of the US$1.5 trillion in new corporate debt issued globally through May, US$825bn (55%) was issued by financial companies while US$688bn (45%) was issued by non-financial companies. By rating, US$888bn (59%) was investment grade and US$232bn (or 15%) was speculative grade. S&P did not rate US$392bn of the debt that came to market in the first five months of 2014.

At the lowest end of the rating spectrum, US$3.6bn of debt rated B- and lower came to market in May this year, against US$12.4bn in April, US$8.7bn in March, US$4.7bn in February, and US$8.8bn in January. “Continued access to the capital markets is essential for many less creditworthy companies to avoid defaulting on their obligations,” commented S&P.

Defaults occurrences remained low globally, with only 1.81% of speculative-grade companies defaulting in the 12 months through April 2014, down from 2.27% in 2013 and 2.56% in 2012.

“With a significant amount of corporate debt set to mature over the next few years, it is essential that investors continue to allocate capital to the credit markets,” commented S&P. “We estimate that about US$8.9 trillion in rated corporate debt is scheduled to mature between 2014 and 2018.

“Given the robust new issuance activity in recent quarters, a portion of the US$1.6 trillion that is due in 2014 has likely already been refinanced but it is not completely reflected in our dataset due to reporting lags.”  

 

  

 

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