Global issuance of debt securities dropped notably in the third quarter amid a spike in financial market volatility, reports Moody’s Investors Service.
In a new report, the rating agency says that global issuance of debt securities by both financial institutions and non-financial corporations totalled US$804 billion in the third quarter, down from US$1.1 trillion in the second quarter.
“Primary issuance markets have been negatively affected by growing concerns about the global growth outlook and uncertainty about the timing, pace and economic impact of future U.S. monetary policy tightening,” says Marie Diron, senior vice president in Moody’s macroeconomic unit.
Moody’s notes that the fall in issuance was broad-based across regions and sectors. For instance, it says that issuance decreased by about 38% from the previous quarter in both advanced economies and emerging markets. And, it notes that high-yield issuance in Europe was down by almost two-thirds from record high levels in the second quarter.
Notwithstanding the third quarter slump, Moody’s says that year-to-date issuance by non-financial corporates is broadly unchanged from 2013, and issuance by financials is up by US$290 billion, powered by high levels of issuance in the first half of the year.
Looking ahead, Moody’s expects the fall in asset prices and increase in financial market volatility to continue weighing on global issuance. “Financial market tensions have continued at the beginning of Q4, pointing to even lower issuance this quarter than the high levels seen during the first half of the year,” adds Diron.