Credit Crunch Hit 2007 Bond Issues

by Carla Johnson, Investors Offshore.com

24 January 2008

Figures this week show that the credit crunch brought about a 26.5% (USD421.56 billion) drop in new bond issues in the second half of 2007.

The figures, released on Tuesday by Xtrakter, a not-for-profit provider of data, operational risk management, trade matching and regulatory reporting services to the global capital market, revealed that this decline was in contrast to earlier increases made in the first half of the year. Specifically Q3 figures declined by 28.7% (USD202.64 billion) and Q4 figures declined by 24.8% (USD218.94 billion) when compared to the same period in 2006.

By comparison there were increases of 9.2% (USD 79.218 billion) and 16.9% (USD 126.972 billion) which occurred in Q1 and Q2 respectively.

According to Xtrakter, these figures indicated a shift in market forces. Overall this shift resulted in a total decline of 6.7% (USD215,379 billion) in new issuance figures for 2007.

“This highlights the impact of the credit crunch on the capital market, new issuance figures dropped dramatically in Q3 and Q4 in line with the overall liquidity challenges facing the market” observed Kevin Milne, Chief Executive, Xtrakter.

The Euro was again the preferred currency of issue in 2007, capturing 49.6% (USD1.479 trillion) against the US Dollar which was chosen by 30.6% (USD913.6 billion) of new issues. During the same twelve month period, the global capital market increased in total value to USD11.5 trillion in terms of outstanding debt, providing an overall 9.27% increase on 2006 figures.

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