Global corporate new bond issuance has been robust in the first five months of 2014, totaling US$1.5 trillion, but remains lower than the nearly $1.6 trillion issued during the same period in 2013, according to Standard & Poor's Ratings Services.
In May 2014, $320 billion in new corporate bonds came to market. This follows the $301 billion issued in April 2014 and $347 billion issued in March, S&P said.
Of the $1.5 trillion in new corporate debt issued globally through May 2014, $825 billion (55 per cent) was issued by financial companies while $688 billion (45 per cent) was issued by nonfinancial companies.
By rating, $888 billion (or 59 per cent) was investment grade and $232 billion (or 15 per cent) was speculative grade. Standard & Poor's Ratings Services did not rate $392 billion of the debt that came to market in the first five months of 2014.
At the lowest end of the rating spectrum, $3.6 billion of debt rated 'B-' and lower came to market in May 2014 compared with $12.4 billion in April, $8.7 billion in March, $4.7 billion in February, and $8.8 billion in January. Continued access to the capital markets is essential for many less creditworthy companies to avoid defaulting on their obligations. Defaults occurrences remained low globally, with only 1.81 per cent of speculative-grade companies defaulting in the 12 months through April 2014, down from 2.27 per cent in 2013 and 2.56 per cent in 2012.
"With a significant amount of corporate debt set to mature over the next few years, it is essential that investors continue to allocate capital to the credit markets. We estimate that about $8.9 trillion in rated corporate debt is scheduled to mature between 2014 and 2018. Given the robust new issuance activity in recent quarters, a portion of the $1.6 trillion that is due in 2014 has likely already been refinanced but is not completely reflected in our dataset due to reporting lags," it said.
Maturing debt will escalate in the succeeding years to approximately $1.8 trillion in 2015, $1.9 trillion in 2016, and about $1.8 trillion in both 2017 and 2018. Financial companies account for slightly less than half of the total due to mature through 2018, and about 79 per cent (or nearly $7 trillion) of the debt is investment grade.