Global funding trends on the capital markets in 2013

Over the course of 2013 the outlook for economic recovery in the developed countries progressively firmed, especially in the United States and the United Kingdom, while in the emerging economies it turned down. Against this background, and despite expectations of fewer monetary stimuli by the Federal Reserve – which took the form early this year of a reduction in the volume of asset purchases, or tapering – and the subsequent rise in long-term interest rates (even though these are at historical lows), investor risk appetite and yield search have picked up. Only during the summer, owing to communication problems concerning the Federal Reserve’s monetary policy strategy, were increases in market volatility and a degree of risk aversion observed. These developments marked the course of capital markets in 2013, in a setting in which fiscal consolidation and private-sector deleveraging continued apace in the developed countries. Global fixed-income issuance fell owing to the declines in public-sector and bank issues, despite the fact that riskier paper (high-yield corporate and emerging-market issues) reached record volumes. This article analyses recent developments on international capital markets, for both developed and emerging economies, with a particular emphasis on fixed-income instruments. The analysis focuses on issues by non-financial corporations and by the banking sector, looking at different funding instruments. Apart from fixed-income, issues of equity and hybrid products are discussed, along with structured financial markets. The analysis draws chiefly on data from Dealogic and covers issues of a term greater than or equal to 18 months.