Gov regs62

Getting to ‘Know Your Customer’ Is a Major Pain

KYC provisions have been dogging companies for years. But some are now exploring the use of Blockchain to help ease this pinch point.

Wallet

Custodian Banks - Unloved but Here to Stay

There are a lot of things that treasurers would rather do than work with their custodian banks. But with MMF reform, custodian banks are here to stay.

iTreasurer logo 2016

Subscribe Now

Today is over. Subscribe to iTreasurer and
get ahead of the problems you will face tomorrow.

Capital Markets

Nine Years Running: Corporate Debt Issuance Boom

Share |
October 05, 2017

Low rates and friendly terms driving boom in debt markets.

Bond2Perhaps it’s the lax covenants being offered, along with the added boost of a low-interest-rate environment, but corporate debt issuance continues on its tear. US investment-grade debt issuance was up in the second quarter of 2017, according to Reuters, recording its ninth consecutive year-over-year gain for US high-grade debt. Globally debt issuance was down vs. a year ago.

A trend of increasingly friendly terms for all types of corporate debt appears to be continuing into the end of the year, according to an earlier report from Fitch Ratings. These include advantageous terms like higher covenant thresholds and compressed spreads. This isn’t a new trend, however, as low rates have boosted issuance for nearly a decade.

According to Reuters, high-grade corporate debt offered in US markets totaled $1.1 trillion during the first nine months of 2017. That’s a 1% increase compared to the first nine months of 2016. During the third quarter of 2017, US investment-grade corporate debt totaled US$356.1 billion, up 7% compared to the second quarter of the year.

High yield debt had a better quarter. Global junk issuance in the first nine months of the year rose 31% compared to the same time last year. Volume reached $317.2 billion and Reuters says it is the strongest opening nine-month period for global high yield issuance in three years. “United States high yield issuers accounted for 54% of total issuance, down from 60% a year ago” with China and the UK accounting for 7% and 6%, respectively, Reuters says.

The biggest issuer was telecom, up 66% to $149.2 billion in the first nine months. Meanwhile, healthcare, government and agency issuance showed declines, down 25% and 15%, respectively. Reuters adds that government and agency, and financial offerings accounted for a combined 70% of issuance during the first nine months of 2017, down from 72% a year ago. Corporate debt from emerging markets issuers was also up in the first nine months, totaling US$255.7 billion. That’s up 28% compared to the same time last year. Reuters says corporate debt issuers from India, Brazil, Mexico and Russia accounted for 45% of issuance activity.

Despite the increases in certain areas, globally, debt issuance was down compared to a year ago. Reuters says debt market activity totaled $5.6 trillion in the first nine months of the year, a 4% decrease compared to same period of 2016. It’s also the slowest opening nine-month period for global debt capital markets activity since 2015.

comments powered by Disqus