Quarter end busy again for bond market
The bond market machinery is turning over at May 2007 levels, with last week's demand and pattern of issuers a sign of sure footings as financial institutions worldwide tackle the immense funding task generated by the credit shock.Everyone needs capital.Last week the bond market handled A$5.1 billion of new debt. This takes the total for June 2009 to A$8.7 billion, in line with the A$8.7 billion recorded in March.A bright June takes issuance on a rolling twelve-month basis back over the A$60 billion mark, a level not seen since May 2007. There were calls last week by a bank CEO for the domestic corporate bond market to be "enlivened", this being in response to the possibility that the banks will be unable to meet the demands of the corporate sector for debt funding in the years ahead.Yet with the market already back to its best ever levels (issuance in 2006 just exceeded A$62 billion) and with all the additional government bond issuance now coming through, one wonders how much more debt investors can absorb.The only problem with current market conditions is that true corporate bond issuance remains almost non-existent. As a result, investors still have portfolios heavily concentrated in financial institutions of one sort or another. This is where our market needs to be enlivened.