In One Chart: Global bond issuance falls to a decade low as interest rates climb

Global bond issuance fell to about $1.7 trillion in the first quarter, the lowest volume to kick off a year in a decade, according to data from Dealogic.

The first quarter retreat marked a 25% decline in new bond supply from a year ago, putting 2023 on pace for its slowest start since at least 2014 (see chart).

Global bond issuance hits a slump as interest rates climb


The debt world felt the drag of only $608 billion of new bond supply from the Americas, typically a borrowing powerhouse, with a 32% decline in volume from the same stretch of 2022, according to Dealogic’s tally.

U.S. corporate bond issuance briefly ground almost to a halt in March after the sudden collapse of Silicon Valley Bank led to fears of instability in the U.S. banking system and days of market turmoil.

See: What ‘unprecedented’ volatility in the $24 trillion Treasury bond market looks like

Yields on U.S. investment-grade corporate bonds were about 5.2% to kick off April, up from a pandemic low of less than 2%, according to the ICE BofA US Corporate Index.

Bond yields have increased along with borrowing costs for governments, businesses and households since the Federal Reserve and other major central banks began raising rates to fight high inflation.

Concerns about instability at U.S. banks has put a spotlight on interest-rate risks tied to their holdings of older, low-coupon assets, including commercial real-estate loans, that likely would fetch less if sold on the open market.

Bond issuance from the real-estate industry was only $30 billion in the first quarter, less than half of the volume from the same period of 2022, according to Dealogic.

Also pressuring banks, higher bond yields give depositors options to earn income outside of parking their cash in saving accounts.

The 6-month Treasury

rate was near 4.74% on Tuesday, while the 10-year Treasury yield

was around 3.35%, according to FactSet.

Stocks finished lower Tuesday, with the Dow Jones Industrial Average

shedding about 200 points, while the S&P 500 index

was 0.6% lower, according to FactSet. Both snapped a 4-session win streak.

Read: JPMorgan’s Jamie Dimon says banking crisis is ‘not over,’ but it will pass


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