International debt issuance drops 30% in Q2 - BIS

    The issuance of international debt securities, such as bonds and collateralized securities, fell in the second quarter of 2012 due to a plunge in issuance by financial institutions, especially euro area banks, the Bank for International Settlements (BIS) said.
    Global gross issuance of international debt securities fell 30 percent to $1.83 trillion in the second quarter from the first. Taking account of repayments, net issuance plunged by 92 percent to $63 billion, the smallest amount since the second quarter of 1995, the BIS said in its September Quarterly Review.
    Net issuance declined across the globe, with European issuers making net repayments of $92 billion while issuance by U.S. nationals was cut in half to $50 billion and that from emerging market borrowers fell 40 percent to $75 billion.

    BIS said the decline may reflect a front-loading of issuance to the first quarter by banks who wanted to take advantage of the European Central Bank's longer-term refinancing operations (LTROs).
    "Moreover, funding conditions in global debt markets deteriorated in the second quarter on revived market tensions in the euro area, weaker than expected economic data in the United States, and worries about the growth outlook in emerging markets, especially China," BIS added.
    As a whole, corporate issuers cut issuance by 10 percent to $144 billion. But among corporates, U.S. issuers raised an additional 17 percent, or $88 billion, in the second quarter, taking advantage of investors' appetite for investment grade bonds while interest rates are low. European corporate issuers decreased their issuance by 35 percent to $37 billion.
    Click to the read the September 2012 BIS Quarterly Review.

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