AFME Government Bond Data Report Q4 2022 and 2022 Full Year

AFME is pleased to share its Q4 2022 and 2022 Full Year Government Bond Data Report.

Report highlights include:

European sovereign bond issuance remains above pre-pandemic levels: in 2022FY, European sovereign bond issuance, including issuance from EU Member States, the UK and the European Commission accumulated EUR 3163 bn in proceeds, 5.4% below 2021 but 32.7% above 2019.
In Q4 2022, EU Member States and the UK accumulated EUR 770 bn in bonds and bills issuance, which represents an increase of 18.7% (YoY) compared to 4Q21, and a decrease of 11.0% (QoQ) compared to 3Q22.
In 2022FY, European government bond trading increased 15.4% compared to 2021 and 19.4% compared to 2019 (pre-pandemic), according to TraX data from MarketAxess. The traded amount in 2022FY was the highest average daily trading volume in European government bonds since records began in 2014, following consistently high trading volumes reported in all quarters of 2022. During 4Q 2022, European quarterly traded volumes decreased 1.1% (QoQ) but increased 14.2% (YoY).
Outstanding amount of European ESG government bonds reached EUR 333 bn during 4Q22. Volumes were driven by tap issuance in the UK (EUR 2.4 bn), Italy (EUR 2.0 bn), Spain (EUR 1.0 bn), Germany (EUR 1.0 bn) and additional green references issued in Hungary (EUR 1.4 bn). In Austria, a green government bill (EUR 1.0 bn) was issued during 4Q22, representing the first of its kind in the European sovereign space. The inaugural green bill, and green commercial paper which Austria plans to issue from 2023, is part of an overall programme to fund 20% of green expenditure in Austria via short term green debt.
There was a net loss of 2 primary dealers in Europe from September 2022 to January 2023. There were 4 exits and 2 entries of banks to European Primary Dealer systems affecting sovereign debt markets in 4 countries and the European Commission Primary Dealer Network (EU PDN).
During 4Q22 there was 1 long-term credit rating upgrades for European countries and no downgrades. This follows 1 upgrade and no downgrades in 1Q22, 2 upgrades and no downgrades in 2Q22 and 5 upgrades and no downgrades in 3Q22, bringing the 2022 full-year total to 9 upgrades and no downgrades. Most recently during 1Q23, Greece has been upgraded by one notch and Hungary downgraded by one notch in credit rating.
The average bid-cover ratio (demand/amount allocated) was 2.1 in 4Q22, a decrease of 9.6% (QoQ) from 3Q22 and a decrease of 7.1% from 4Q21 (YoY).