As the global loan market doubled to $20 trillion in the past 3 years, and compliance rules got tougher, the pressure for digitization has grown. Platforms can be used to conduct the entire syndication process. They are secure and audited, helping banks with compliance. They offer quicker turnaround times for secondary loan sales, freeing up bank's money.

Bond ETFs have grown from $10 bln in 2009 to $1.2 tln. They significantly deviate from the original ETF principle. In effect they are derivative products, reliant on complex structures that may be open to abuse. Also, corporate bonds are less liquid, but tougher bank capital rules have made capital-intensive activities, like market making, unattractive.

Belgium plans to lure mom-and-pop investors with a 10-year bond that pays a 3% coupon, more than the 1.74% offered by Belgian banks. This could pave the way for a green retail bond. European countries hope that investors will buy more government bonds as central banks exit the market. Fitch estimates that around €650 billion will be needed in 2023.

Last year was the worst for bond markets in more than a century. Global bonds lost 31%. Between 1982 and 2021, the world bond index had 6.3% annual real return, while global equities returned 7.4%. Equities and bonds sold off sharply in 2022. Even if bonds regain their role as a cushion against stock market losses, equity-like returns will not come back.

In 2030, demand for electricity in Germany will be around a third higher than today. A fleet of new power stations running on imported natural gas should generate electricity when wind and sun aren’t available and they might be converted to run on hydrogen later on. The government is struggling to find investors willing to take on such costly projects.

During the Covid-driven market sell-off, bond ETFs traded at discounts to their net asset value. ETF issuers trade only certain bonds with market makers, who are reluctant to buy more of them on the market, reducing their liquidity. This is suggested by a new paper, after both the IMF and the BIS questioned the impact of ETFs during stressed markets.

The asset class is seen as low risk but offers the best returns in years. Investors want to lock in historically high yields. They no longer need to push into riskier debt in search of decent returns. $182 billion investment-grade bonds were issued in the US and $246 billion in Europe on the assumption that bonds hit “peak yields”, but this is now in doubt.

Higher interest rates have increased interest in so-called liability management to reduce debt and cash flow pressure on companies. Liability management includes suspending dividends, selling assets, amending debt documents and discounted bond buybacks. Italian energy company Enel plans to sell assets worth €21 billion to reduce its debt ratio.

Barclays Plc expects its competitors to lure savings customers with higher interest rates. Advances in online banking and the prevalence of fintech upstarts have made it easier to switch accounts. The jump in UK interest rates to 4% in recent months are accelerating years of work by policymakers and startups to challenge the UK’s big 5 lenders.

Last year, $60bn of sustainability linked bonds (SLBs) were issued worldwide, a 37% decline on 2021. Issuance has fallen amid ‘greenwashing’ concerns. Interest rate increases, if a company does not meet its targets, are low. Unlike green bonds used to finance specific projects, SLBs have not benefited from greenium (a lower borrowing cost).

Although central bank interest rates have been rising, Spanish banks have kept interest rates on term deposits on 0.4%. So when the word got out that 3% can be earned on 12-month treasury bills, demand soared. Online purchases reached €400 million in January, as much as the total for 2022, and pensioners queue in front of the Bank of Spain.

Global sales of ethical debt are set to suffer their first drop this year. The market went from “greenium” to underperforming conventional debt. ESG deals that took weeks to structure in 2021, now take months, and money managers take longer to vet the bonds. Europe is expected to lead the sector, but the EU has failed to reach a deal to fight greenwashing.