Global bond issuances will contract by 16% in 2022 after a weak first half of the year, according to ratings agency S&P.
The 16% decline is a downward revision from S&P's prior forecast of 5%.
In a Ratings Direct update, S&P said there is a tough path ahead, as growing headwinds of market volatility, rising interest rates and inflation are joined by recession risks, which have all contributed to slowdowns in second-quarter bond issuance for every sector.
The contraction will keep global bond issuances in 2022 well below those of 2021, leading the agency to revise its full-year 2022 issuance forecasts markedly lower, with little room for market optimism in the second half of 2022, the update said.
"Our downward revision from our prior forecast... reflects the deep hole of the weak year-to-date totals, which we feel will largely prevail for the remainder of the year," S&P said.
However, declines come for most sectors against two years’ worth of unusually high issuance totals, supported by extraordinary fiscal and monetary stimulus, S&P said.
S&P also noted that persistently rising inflation has prompted markets to price in more interest rates increases by most central banks.
“And recession odds are rising, in no small part to expectations for central banks to continue tightening--perhaps too much--while the Russia-Ukraine conflict continues with no end in sight,” S&P said.
“At this point there appears to be little to no possibility for positive surprises in the near term for the global economy or financial markets.”
(Reporting by Imogen Lillywhite; editing by Cleofe Maceda)