It has not always been easy, but the global debt capital markets have grown year-on-year by 4% to US$4.2trn in the first nine months of 2012. Access is a long way from comprehensive, but central bank presidents’ comments – well, one in particular – have helped to open markets further.
How times have changed. In the past, talk of bailouts, IMF loans, and fiscal mismanagement usually meant one thing: yet another emerging market country had run into trouble and needed saving. Now this type of language is being applied to the eurozone. In contrast, the so-called emerging markets are in much better health. Indeed the term “emerging markets” is becoming a misnomer. “Growth markets” seems a more appropriate appellation.
The stature of covered bonds as a funding tool continues to grow by leaps and bounds. Developments that will see senior debt become bail-inable by 2018 are adding to their allure; as is their legal robustness and unassailable place in the capital structure in the event of issuer insolvency. In short, covered bonds have offered a funding lifeline, certainly to non-peripheral banks whose access to capital has been ravaged by the effects of the eurozone sovereign debt crisis.
The eurozone crisis was in full swing when Jean-Claude Trichet took the podium in Berlin last October 6 for his final press conference as president of the European Central Bank. Having helped create one of the longest periods of price stability in the history of central banking, Trichet was closing out his eight-year reign under siege.
A year on from the last Top 250 Borrowers report and the issues that dominate the funding landscape remain largely the same as they did then. Concerns about the eurozone were at the top of the worry list and they are still there today, casting a long shadow that stretches far further than the continent of Europe.
The eurozone crisis has proved to be a sprawling saga that matches anything staged at Bayreuth. Germany, our chief protagonist, rests on the laurels of continuing growth led by robust exports. But the demons of political instability lie lurking in the wings and threaten to blight the feast.
Once the stable bedrock of the markets, the SSA sector found itself rocked to the foundations as concerns mounted about the ability of sovereigns to deal with the crisis that engulfed asset classes across the board – something largely viewed as self-inflicted in the first place.