Essay about Global Long-term Debt Market

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Global Long-term Debt Market

The quantity of global long-term debt issues kept increasing trend generally for recent years. The governments, banks and corporate in every country are issuing more long-term debt instead of short-term debt, which means the increasing of confidence among investors on the prospects for global economy. Long-term debt issues will reduce refinancing risks for the year, and easing worries which build-up of debt maturing may make it more difficult for governments and companies to renew loans. According to Dealogic, issuance of long-term debt maturing over 15 years or more than 15 years has risen to 20% over the past compared with 10% in last year. In common sense, people usually think that it is more risky by holding longer-term debt than short-term debt. However, this shift signals improved investor sentiment. On the other hand, governments, banks and corporate are keen on lock in longer-term debt for stability to reduce the risk of refinancing in the short-term.
Based on Dealogic, there is record high of $3240bn of debt maturing in this year. Banks in particular have issued a lot of short-term debts, which have been guaranteed by government. After the collapse of Lehaman Brothers, investors were only willing to buy short-term debt, which is more liquid. At one point, the only debt the people were willing to buy was short-term US treasuries. Even the Dubai debt scare has failed to put off investors from buying longer-term debt.
With BAA, the UK airports operator, issuing the largest sterling inflation linked bond with a maturity of 30 years. In the past, China, Qatar and Brazilian groups Petrobras and Vale have also launched long-term debt as emerging market issuers have been some of the main beneficiaries of the growing appetite for long-term debt. China also launched 50-year bond and Qatar priced 30-year bonds. Nigel Rendell, a senior emerging market strategist at RBC Capital Market, said: “It is very sensible to lock in longer-term debt now. Companies get stability and investors get higher yield than they would for short-duration debt.”
In US benchmark bonds market. Since the Federal Reserve announced last week that it would not taper its monthly bond buying has provided an opportunity for companies to pull forward their planned debt issuance, the recent drop in US Treasury yields. According to Dealogic, there are at least 10 benchmark deals which led by BHP, with a $5bn offering, AIG and Walmart, which promote September’s account toward $140bn in debt sales, and eclipsing the record $136.6bn mark set in November 2012. Verizon created a big issuance calendar in September which is dominated by the record $49bn of bonds, but
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