May 17 (The following statement was released by the rating agency)
US and EMEA issuance trends diverged in the first quarter
of 2013, according to Fitch Ratings' research. The volume of bonds sold by EMEA
financial institutions and corporates dropped sharply from a year earlier, while
US volumes kept up with the record pace of 2012. However, coupons continued
their across-the-board decline, hitting fresh lows in both regions.
The drop in EMEA of around 41% was driven by lower issuance from financial
institutions, including a 70% decline in covered bond issuance. This partly
reflects particularly buoyant issuance a year earlier, when the European Central
Bank's long-term refinancing operations boosted confidence in the sector. EMEA
corporate issuance in Q113 also fell slightly after significant pre-funding
during 2012, when new issuance ran at close to 3x aggregate maturities, although
April issuance has since put 2013 ahead of 2012 in volume terms.
New issuance from US corporates and financial institutions totalled USD259.5
billion in the first quarter. The USD90.9 billion of issuance by high-grade
financial institutions was the highest since early 2008. The high volumes were
also probably helped by US corporates' willingness to tap bond markets to fund
buybacks and other shareholder-oriented transactions, which EMEA corporates have
so far been less willing to do.
Coupons continued their decline across both regions as yield-seeking investors
continued to drive down risk premiums. In EMEA this enabled corporates to push
out yield curves, with 30% of all new issuance having a tenor of 10 years or
more, compared with 18% in 2008. In the US this trend resulted in the
par-weighted average coupon of outstanding corporate bonds falling by around
10bp each quarter since early 2011.
These trends and others are highlighted in two recent reports; "EMEA Corporate
Bonds: Rating and Issuance Trends," and "US Corporate Bond Market: First-Quarter
2013 Rating and Issuance Activity," available from www.fitchratings.com.