Global bond issuance expected to decline 3% by 2018-end: S&P Global

Global bond issuance is expected to finish 2018 at $6.05 trillion, a decline of roughly 3.5 percent from 2017 total, revealed S&P Global Fixed Income Research.

“With base case assumptions for 2019 factoring in a continuation of increased market volatility, slowing global economic growth, and higher interest rates in the US and (eventually) in Europe, the preliminary forecast for the year reflects a modest growth rate of 0.62 percent to $6.09 trillion,” the report said.

Emerging markets will also likely fluctuate between increased capital outflows and increased domestic interest rates, it highlighted.

“Emerging markets have recently seen large capital outflows and volatile regional politics and are expected to see slower economic growth across all sub regions, largely as a result of trade conflicts this year,” said Diane Vazza, head of S&P Global Fixed Income Research.

“We expect many current global risks to continue into 2019, with nearly all having a deleterious effect on issuance. The decline in issuance in the U.S. will likely continue,though at a slower pace, as economic growth slows,” she further added.

While issuance is certainly facing an uphill battle, the report mentioned some bright spots for 2019.

“China may slow its deleveraging policies in the face of slowing growth, and the country's corporate and financial services firms face a surge in maturing bond debt next year. Trade tensions may yet deescalate, and the merger and acquisition pipeline still appears strong,” the report noted.