Corporate Bonds Top $1 Trillion Mark

By SONJA CHEUNG and CLARE CONNAGHAN Global corporate bond volumes, excluding banks and other financial institutions, surpassed the $1 trillion mark for the first time as tight bank lending has forced companies to seek funding elsewhere. Bond volumes passed $1 trillion July 15 as French energy group Éléctricité de France SA sold bonds worth €3.3 billion ($4.6 billion), data compiled by data provider Dealogic showed Tuesday. The volumes have since risen to $1.10 trillion, up 22% from the previous record high of $898.3 billion set in 2007, with more than four months left in the year. The utility and energy sector has made the largest contribution to the rise, according to Dealogic, with $188.4 billion issued so far this year. In Europe, where companies have traditionally preferred loans from banks over bonds, the volume of non-financial bond issuance totaled $426.5 billion in the year to date, up 47% from the $290.4 billion raised in 2008, Dealogic said. Meanwhile, loans have fallen dramatically. The volume of high-value, syndicated loans issued to European borrowers has declined to €235 billion so far this year from €651 billion in 2008, figures from Dealogic showed. On a global basis, loan volumes have dropped to $1.1 billion year to date in 2009, compared with $3 billion in 2008. A shift to bond financing from loans was already underway in 2006 and 2007 as corporations sought to diversify and looked for longer-term funding, said Jean-Marc Mercier, head of syndicate Europe at HSBC Holdings PLC. Typically, bonds have a longer maturity than loans. "Even when bank-market conditions ease, corporates may continue to tap the capital markets for new cash," said Mark Lewellen, head of European corporate debt capital markets at Barclays Capital. J.P. Morgan Chase & Co. is the lead bookrunner globally of all corporate bonds, excluding those sold by financial institutions, this year with a share of 8%. Citigroup Inc. is ranked second with a 7.3% share, according to Dealogic. —Duncan Kerr contributed to this article. Write to Sonja Cheung at sonja.cheung@dowjones.com