DUBAI: Global bond sales are projected to rise by 17 per cent in 2024, reaching approximately $9 trillion, according to a report by S&P Global Ratings.
The upward revision reflects a notable momentum carried from the third quarter of the year, which witnessed unprecedented activity in the bond market.
In July, S&P analysts had predicted sales in 2024 would climb 9 per cent to about $8.3 trillion.
The S&P report suggests that the pace of bond issuance may moderate to a 4 per cent increase in 2025. The anticipated slowdown is attributed to several factors, including a high base of comparison from the current year and ongoing concerns regarding economic growth.
While borrowers have faced years of aggressive rate hikes by central banks, expectations of modest rate reductions in 2025 may stimulate further corporate activities, including mergers and acquisitions.
Challenges
The bond market’s resilience demonstrates a collective understanding among market participants regarding potential interest rate cuts in the coming year. The consensus is likely to bolster issuance levels, as lower borrowing costs typically encourage debt-driven growth strategies.
Additionally, factors such as upcoming debt maturities, strategic moves by China to enhance economic growth, and increased investments in artificial intelligence are foreseen as contributing drivers of global bond issuance over the next few years.
However, the forecast for 2025 is not without risks. Challenges to global trade, which could subsequently influence inflation rates and the policy decisions of central banks, remain a significant concern.
Any delays in anticipated rate cuts could dampen the enthusiasm for new bond issuance, reminding stakeholders of the fragile balance between economic growth and monetary policy.
