For the third consecutive year, global bond issuance set a new record in 2021 with some $9tn of supply, up 5.6% from the previous year. But this trend is set to come to an end in 2022 with supply set to fall by 2% as central banks tighten monetary policy, according to S&P Global Ratings Research.
Total supply for 2022 is forecast by S&P Global Ratings Research at $8.81bn, a drop of 2% from 2021.
Non-financial corporate issuance will see the biggest decline in issuance by about 7%, dropping from $2.96tn to $2.75tn.
Financial issuance will show flat to modest growth in 2022, from $3.07tn to $3.1tn. In Europe, issuance will be driven by the phasing out of the European Central Bank’s third round of targeted longer-term refinancing operations (TLTRO III). However, banks are likely to prefer covered bonds rather than senior issuance, given their lower yields.
Structured finance issuance will see the biggest growth by about 3% from $1.29tn to $1.33tn. The sector grew by 45% to $1.3tn of supply in 2021, the biggest growth since the global financial crisis. Asset-backed securities (ABS) issuance will be supported by elevated used-vehicle values and sales expectations. Meanwhile, home prices will be supportive for residential mortgage-backed securities (RMBS) originations.
US public finance issuance could increase by 2% from $475bn to $484.5bn, while international public finance may decline slightly from $1.2tn to $1.15tn.
