Europe’s markets for new government debt had a bustling start to the year, defying fears that hefty borrowing would make it more expensive to raise funds to help finance the economic recovery from Covid-19.
Bond syndication deals run by banks had their busiest first quarter ever, with the equivalent of $150bn raised by governments across Europe and the UK, the largest volume for that time of year on Refinitiv records going back to 2000. Overall bond issuance by major eurozone government borrowers, including auctions, was €373bn, according to figures compiled by ING, 20 per cent higher than last year.
Demand proved resilient despite the flood of supply and volatile price moves for bonds trading on the open market. Strong investor interest in the primary market for new debt, supported by the European Central Bank’s purchase programme, allayed concerns that governments would need to pay substantially more for their borrowing.
“January and early February were probably the hottest primary market we’ve ever had,” said Jamie Stirling, global head of sovereigns,…
