Is this as good as it ever gets in the international debt capital markets?
There’s continuing and large-scale central bank quantitative easing; new economic data soft enough to suggest continued accommodation, but not disastrous enough to herald economic catastrophe; reduced new-issue volume from a deleveraging banking system creating a scarcity of paper; and investors desperately searching for yield. These have all combined to create near-perfect conditions for a wide range of borrowers.
 |
Bond deals from risky issuers such as peripheral European sovereigns, peripheral and emerging market corporates and banks, and from high-yield borrowers that might not have been able to access the markets at all a year ago, are regularly being heavily over-subscribed. And this exuberant investor demand comes even when borrowers offer pricing that tests new lows every day for absolute yields and spreads to risk-free benchmarks. For the leading debt capital markets banks, this has been good news. With one important client group – namely banks – issuing far less debt, global DCM volumes were down by 14% overall in the first quarter of this year compared with the first quarter of 2012, according to Dealogic.