Bond issuances expected to decline in 2019: S&P

Global bond issuance will decline by 0.6 percent this year compared to 2018 due to increased market volatility, slowing global economic growth and higher interest rates in the US, S&P Global Fixed Income Research said in its latest report.

New bond issuance totaled $5.8 trillion last year. Non-financial corporates were down 13.8 percent relative to 2017, financial services were off 6.5 percent, and the US and international public finance were below their 2017 totals by 22.3 percent and 11.3 percent, respectively. The only area of growth was global structured finance, which expanded over 18 percent to become a $1 trillion asset class.

"Financing conditions tightened in the US and Europe during the fourth quarter, largely as a result of an abrupt increase in financial market volatility, leading to a complete lack of speculative-grade bond issuance in both regions in December," said Diane Vazza, head of S&P Global Fixed Income Research.

"Corporate credit spreads widened considerably in the last weeks of the year, and though they have declined somewhat since, we nonetheless believe tighter financial conditions are here to stay, signaling a turn in the credit cycle."

Meanwhile, emerging markets could fluctuate between increased capital outflows and increased domestic interest rates, with support for issuance growth coming from a large increase in maturing debt, particularly in China, the report added.