German companies are relying on issuing bonds to help finance investments as banks tighten lending conditions, Moody’s Investors Service said.
While volumes of issuance are the highest in the automotive, utilities, manufacturing, chemicals and telecommunication industries, the number of first-time or infrequent small to medium-sized issuers has risen in late 2010 and early 2011, Moody’s said in a report today. Bond issuance by German corporates surged to 73 billion euros ($97 billion) in 2009 and stabilized around 39 billion euros in 2010 and 2011.
“The increase in bond issuance among German corporates is partly the result of restricted bank lending and their significant refinancing requirements,” said Matthias Hellstern, associate managing director at Moody’s in Frankfurt. “However, it is also driven by increased capacity in the bond markets, given the lack of alternatives in an environment of low interest rates, weak equity markets and a low prevailing default rate.”
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