Global debt capital markets activity falls 19% to $8.3tn in 2022 amid high interest rates

International bond offerings declined 30 per cent to $3.6 trillion

The trading floor at the New York Stock Exchange. Reuters

The global debt capital markets activity in 2022 reached $8.3 trillion, down 19 per cent compared to the previous year amid high interest rates, according to Refinitiv.

The total DCM activity recorded for the year was the slowest since 2019, the company said in a report.

The number of new offerings brought to market during the full year of 2022 also fell to a three-year low at 26,625, while DCM issuances during the fourth quarter of 2022 decreased 13 per cent compared to the third quarter of this year and fell below $2 trillion for the second consecutive quarter for the first time since the fourth quarter of 2018.

The latest report comes as interest rates continued to climb globally as a result of high inflation caused by the coronavirus pandemic and the fallout of the Russia-Ukraine conflict that pushed oil prices to close to $140 per barrel.

Central banks, including the US Federal Reserve, Bank of England and the European Central Bank, have raised rates this year by a cumulative 4.25 per cent, 3.25 per cent and 2.5 per cent, respectively, Jeanne Claire Walters, senior economist at Emirates NBD, said.

Meanwhile, investment-grade corporate debt offerings globally declined 13 per cent annually to $4.1 trillion in 2022, Refinitiv said.

In the fourth quarter of this year, investment-grade debt issuance totalled $825.7 billion, down 11 per cent compared to the third quarter.

Global high-yield debt activity during the full year fell 80 per cent to a 14-year low at $133.2 billion, according to the report.

Fourth-quarter high yield issuance fell below $20 billion for the first time since the first quarter of 2009. High yield offerings from issuers in the US, Canada, the UK, and France accounted for 76 per cent of full-year 2022 issuance, down slightly from 77 per cent a year earlier, the report said.

Green bond issuances also declined as interests continued to rise globally. According to figures compiled by Refinitiv and the Climate Bonds Initiative, green bond issuances for the year fell 19 per cent to $389.5 billion. This was the first annual decline since records began in 2015.

Earlier this year, Saudi Arabia’s Public Investment Fund raised $3 billion through its first bond issuance to finance or refinance its green investments in renewable energy, energy efficiency, green buildings and clean transport.

Abu Dhabi National Energy Company, better known as Taqa, together with Emirates Water and Electricity Company, also raised $700.8m through a green bond as part of fund diversification efforts and the inclusion of sustainable financing for projects.

International bond offerings, meanwhile, declined 30 per cent to $3.6 trillion in 2022. Debt from emerging market corporate issuers totalled $225.8 billion during the full year, down 42 per cent compared to a year ago, the report said.