Corporate bond sales set to outpace 2012 Global corporate bond issuance cruised past $3tn last month and this year is set to exceed the level reached by the end of 2012, according to Standard & Poor's. If this materialises, the 2013 bond issuance total will be the second highest on record, trailing only 2009"s total, when significant government assistance globally pushed issuance levels above $3.3tn. The rating agency said the attractive risk-return trade-off in a low default environment and the stronger economic growth that it expected in much of the globe were catalysts for investors to continue to provide funding in the credit markets in 2014. But from the high levels reached in 2013, S&P said it expected new corporate issuance to grow modestly in 2014, at a rate between flat and 6 per cent higher. We are mindful that corporate leverage is growing, although it is still manageable, and this could give investors pause. Funding for less creditworthy entities is usually the first to dissipate when investor confidence starts to fade. Moreover, the prevalence of refinancings in the last two years tempers our expectations in 2014. S&P said investors" willingness to lend money and the low cost of capital had allowed many companies to pursue capital-intensive projects, make strategic acquisitions, and refinance obligations, which extended maturities and lowered funding costs. "With relatively few alternatives to improve yield, investors were eager to lend even to entities with lower credit quality," said Diane Vazza, head of S&P's global fixed income research. By the end of 2013, the agency predicted global corporate speculative-grade bond issuance was likely to exceed $500bn for the first time, and comprise more than 15 per cent of the total year's issuance. To put this in perspective, speculative-grade bond issuance was $208bn in 2006 and $213bn in 2007, before the global recession, and fell to just $56bn in 2008. Even entities at the lowest end of the ratings spectrum were able to come to market, which S&P said was partly the reason why defaults had been less frequent in 2013. Globally, only 2.2 per cent of speculative-grade companies defaulted in the 12 months through the end of October 2013, down from 2.5 per cent in 2012. However, it said many companies would probably continue to pursue debt refinancings in 2014 because maturing debt in the following three years remained significant, at $1.4tn in 2015 and $1.2tn each in 2016 and 2017. Provided that investors remain interested, companies will continue to pursue opportunistic strategies by pushing out maturities, lowering their funding costs while still feasible, and raising capital to engage in strategic initiatives aimed at improving market competitiveness.