Corporate Funding Monitor: the changing face of finance — January 2014

The Allen & Overy Corporate Funding Monitor looks at loan, bond and equity issues to non-financial corporates over the past decade to see what impact regulatory pressures, bank deleveraging and the emergence of alternative sources of finance have had on the way companies access funding. The data is taken from Thomson Reuters and excludes funding to financial and real-estate companies.

Following years of volatility and uncertainty, the financial markets appear to be stabilising. What’s now clear, as the dust settles from the financial crisis, is that a structural shift has taken place in the way that corporates access finance. Unable to rely exclusively on banks after the crisis, treasurers have become used to capital market funding and are enjoying the benefits of greater diversification, both in terms of flexibility and cost. And banks are reshaping themselves to work symbiotically with funds and other capital market players.

If there is one clear global trend over the past 10 years, it is the steady growth in bond financing everywhere. The value of bonds issued globally (excluding financial institutions and real-estate companies) has nearly tripled in the past decade, rising from $585bn (£356bn) in 2004 to $1.7 trillion in 2013. In the three years before the crisis, bonds accounted for 18 per cent of the funding mix between loans, bonds and equity issues. In the three years since 2011, they have averaged 29 per cent…

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