If there is anything certain in these most unusual times, it is that no one can say what the effects of the coronavirus pandemic will turn out be. All that is known is that they will likely be long-lasting and will definitely be costly. Against this backdrop, public sector borrowers around the globe sprang into capital markets action, raising billions to help fund the various schemes put in place to combat the virus and mitigate its repercussions. Some were quick off the mark and others less so, while a few naysayers were notable by their lack of cohesive action. But, generally, they showed their mettle. And they came from every level - from supranationals to sovereigns and their agencies to regional entities. Issuers already set to borrow billions simply upped their plans and embarked on borrowing billions more - lots of them.
Sovereigns, supranationals and agencies rushed to the bond market this year to finance the fight against the biggest social issue of the moment: Covid-19. If ever there was a time for the social bond market to take centre stage, then this is it, and it is SSAs that will drive its development.
Of all countries, Germany was at the forefront of utilising the capital markets to fund its coronavirus response. From a federal to regional level, its public sector institutions tapped into investor demand for safe-haven assets in the face of what were testing times for both the buyside and sellside alike.
African nations require an immediate bilateral debt standstill to cope with a humanitarian crisis during the Covid-19 outbreak but should not be allowed to write down their sovereign debt, as it would make it harder for them to access international capital markets in the future.
The Covid-19 pandemic prompted the UK’s debt management office to overhaul its funding strategy, putting it on course to hit its £225bn target by the end of July.
The coronavirus crisis prompted a marked increase in international bond issues by peripheral eurozone sovereigns, regions and agencies. This intensified push culminated in the record-breaking €31bn raised by Italy and Spain in April.
As the coronavirus pandemic swept relentlessly across the world from China to Europe and then on to the US, the leaders of Latin America’s two largest economies remained in denial about the threat even as the deadly virus marched ever closer.
Anything that was in the in tray for the Federal Reserve and the US Treasury for 2020 has been rudely displaced by coronavirus. The ultimate costs and consequences remain undetermined but the role of the state is clearly larger and more inextricably entwined with the economy than before.
Although Covid-19 stimulus means that government and semi-government issuance out of Australia has beaten all records, investors continue to flock to the Aussie curve.
Social bonds have taken centre stage in the public sector response to the brutal economic fallout from the Covid-19 onslaught. The need for affected countries to fund their response via capital markets is pressing, in particular in the developing economies of Asia-Pacific, and yet issuance from the region has been tellingly muted.