Issuance of debt securities by euro area residents
20 October 2015
In August 2015 €409 billion of new debt securities was issued by euro area residents (“gross issues”). The figure fell from a peak of around €1,500 billion in January 2009 to a level not observed since December 2000. At the same time redemptions amounted to €413 billion.
The banking sector accounts for nearly half of the new debt issuances (€181 billion in August), of which more than three-quarters (€139 billion) was issued as short-term debt securities and less than one-quarter as long-term debt securities (€42 billion). Following the financial crises the issuance activity of the banking sector has decreased significantly since its peak, going from over €1,000 billion in December 2008 to less than one-fifth in August 2015. Since the end of 2011, the annual growth rates of debt securities issued by the banking sector has fallen steadily from 5% (December 2011) to the lowest level of minus 9% (June 2013) and it has since hovered at around minus 8% (see the monthly securities statistics press releases). The government sector is the second largest issuer, having raised €155 billion on the capital markets in August 2015.
Securities are an important and large asset class and are used for raising capital in financial markets. Securities statistics provide information on borrowing and lending activities and are used in the monitoring of financial structures and changes to the respective sectors of the economy. For instance, the outstanding amounts of debt securities provide information on the depth and extent of capital markets and its developments via flows (gross issuance, redemptions and net issuance activity). Characteristics of securities are used for calculating yield curves and to understand their impact on market interest rates. Data on securities provides valuable information about substitution effects among asset classes. For example, in the case of corporates, debt securities are a close substitute for equity financing and are an alternative to borrowing from banks. Similarly, for investors, buying debt securities is a close substitute for holding deposit accounts, equities or other types of financial assets. Debt securities are negotiable and are traded on secondary markets; furthermore, they are included as part of the monetary aggregates (M3), if issued by a bank with a maturity of two years or less.