<\/p>\n
Bond issuance up, driven by accelerated refinancing.<\/p>\n
While global bond issuance was strong in the first half of 2024, that\u2019s expected to slow a bit in the back half of the year, as rising market volatility and soft merger and acquisition (M&A) volumes weigh on corporate debt activity, says S&P Global Ratings.<\/p>\n
In a report released, the rating agency said global bond issuance was up by 13% in the first six months of 2024 to US$4.7 trillion amid strong demand for refinancing, and as borrowers sought to raise new debt ahead of rising uncertainty.<\/p>\n
The U.S. public finance segment led the way, with issuance up 33.2% in the first half, followed closely by global structured finance, which was up 28.3%, S&P reported.<\/p>\n
Much of the strong issuance was due to refinancing activity, the report noted.<\/p>\n
\u201cThe relative lack of net new issuance for expansionary financing provides a qualification to the strong absolute levels of issuance in the first half,\u201d S&P said.<\/p>\n
With some debt refinancing activity being pulled into the first half, the pace of new issue activity is likely to ease in the second half of the year, resulting in a 9% increase to about US$8.3 trillion for the full year, the report noted.<\/p>\n
\u201cWhile markets are increasingly optimistic about interest-rate cuts ahead, residual concerns around economic resilience, an accelerated pace of refinancing, still modest merger and acquisition (M&A) activity, and continued fears of uncertainties that could raise market volatility later this year provide offsets,\u201d S&P said.<\/p>\n
Geopolitical risks remain elevated, with a large number of elections taking place this year and ongoing conflicts in Ukraine and the Middle East, which may also impact bond issuance activity, the report noted.<\/p>\n
S&P said M&A activity has been stabilizing this year \u201cbut at lower average levels,\u201d with many deals \u201cbeing financed via equity, limiting upside for issuance growth as a funding source.\u201d<\/p>\n
As global interest rates fall over the next 12 months, M&A activity is expected to pick up too, which may ultimately boost bond issuance too, the report suggested.<\/p>\n
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