Aug 01, 2013
New York, July 29th 2013 - Total long-term debt issuance by banks has leveled off over the past year, as the continuing decline in European banks' issuance is offset by North American issuance, says Moody's Investors Service in its latest Global Bank Debt Report.
The report provides comprehensive information on unsecured bank debt issued by Moody's-rated banks globally. Moody's-rated banks issued approximately $1.14 trillion in unsecured debt for the 12 months ending 30 June 2013, roughly equal to that issued during the prior 12 month period.
There are significant regional differences in the downward trend in global long-term unsecured bank debt issuance that started in 2007. Since then, total issuance is down more than 50%, says Moody's. While total issuance rose by just under 4% over the 12 months ending 30 June 2013, European banks' debt issuance declined 10% over the period, while in North America, debt issuance increased by 28%. In Asia, banks' debt issuance has remained generally flat.
"The ongoing decline in global debt issuance continues to reflect a reduced number of banks issuing debt in the euro area, but North American banks are continuing to access the debt markets," said Robard Williams, a Moody's Vice President -- Senior Credit Officer and co-author of the report.
At the same time, Moody's notes a strong increase in subordinated debt issuance, which is up 124% over year-ago levels. Demand has returned given the greater clarity on the risk-return profile of these instruments, as well as their treatment for regulatory capital purposes. Regulation is increasingly important as banks, particularly in Europe, look to improve their regulatory capital positions and meet market demands for larger loss-absorbing buffers.
The report provides in-depth graphs that illustrate trends in aggregated long-term bank unsecured debt issuance and maturity over various time periods for eight regional groups and 26 individual countries.
Re-disseminated by The Asian Banker