Global bond issuance to contract: S&P

S&P Global Ratings Research expects global bond issuance to contract about two percent in 2022, according to its latest article. The global bond issuance total surprised to the upside in 2021, edging out 2020’s breakthrough growth to finish at USD9 trillion. A particularly strong fourth quarter led to the 5.6 percent annual surge, after the year-to-date total fell just over one percent short of 2020’s through September.

For 2022, fears have grown that the Federal Reserve could move too quickly, aggressively, or unpredictably in its fight with inflation over the coming months, potentially stymieing growth and earnings and exporting tighter monetary policy abroad.

“This is the key item markets appear to be watching, but our base-case assumption that interest rates will rise this year without becoming restrictive remains intact at this point,” said Nick Kraemer, head of S&P Global Ratings Performance Analytics.

However, risks have grown in the past three months. Other headwinds are still blowing, including still-high cash balances among larger firms, China’s deleveraging policies, difficult comparisons with 2021 totals, and the return to trend economic growth. Geopolitical risks have also grown, and several key elections globally this year could bring more unpredictability.