One of those is in Australian-dollar issuance, which is set to rise on the back of high public sector and financial institutional issuance activity.
“2020 saw unprecedented levels of primary activity… as governments around the world provided significant social support to help their citizens through the pandemic.”
Financial issuance is likely to be a major driver of this increase with $A issuance in that sector this year to date already over 40 per cent of the volume seen in 2021. Activity could ultimately double in 2021.
With the right strategy and support there’s significant opportunity on debt markets for companies to take advantage of these developments in what shapes to be an interesting 2022 environment.
Volumes in 2021 declined globally as the impact of the pandemic lingered. Primary volumes remained broadly lower. Volumes in the US fell roughly 20 per cent year on year, Europe 6 per cent and Asia 14 per cent, although that market was quite volatile.
This came after a 2020 which saw unprecedented levels of primary activity driven by public-sector borrowings as governments around the world provided significant social support to help their citizens through the pandemic. It was no real surprise volumes have since dropped.
In Australia, volumes fell by roughly half year-on-year, reflecting the fact 2020’s activity came from the government’s COVID response. Excluding that issuance, the market was down around 8 per cent.
Banks largely stayed out of the market due primarily to the impact of the Reserve Bank of Australia’s Term Funding Facility (TFF). That saw volume shift to other corporates who took advantage of the resulting beneficial pricing. Corporate issuance rose around 30 per cent to roughly $A21 billion across public issuance and private placements
These set of unique circumstances are unlikely to repeat in 2022. Global primary volumes are therefore expected to be lower year-on-year across most markets by 5 per cent to 10 per cent, particularly amid expectations of higher rates and wider credit spreads.
But banks are expected to re-enter the market.