Brexit impact on global issuance will hopefully be muted

The June 23 Brexit vote in the UK led the Bank of England to follow European Central Bank policy, as it announced it would buy investment grade bonds in the secondary markets as well as other stimulus measures.

According to recent research by S&P Global Ratings, it forecasts that global debt issuance this year will finish around 4% lower than 2015. The firm said this follows the 2% decline predicted at the end of the first quarter influenced by the negative impact of Brexit.

The Brexit effect will be felt most keenly in European corporate and asset-backed markets.

However, Diane Vazza, head of research at S&P Global Ratings, said that the firm expects the referendum to have less of an impact on 2016 issuance levels then previously expected.

This recent optimism over Brexit comes only a few months after the firm downgraded EU debt shortly after the vote, putting it in the same league as Kuwait and Qatar, below Finland and Austria.

The main driver for increased issuance this year will be China, as despite calls for the government to reign in excessive credit growth, “we do not expect this to happen in the near future,” says Vazza.

©2016 funds europe

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