Global Bond Issuance To Top A Staggering $8 Trillion In 2012

Tyler Durden's picture

As households are supposedly deleveraging and European nations face austerity, one might suspect that global debt levels were stabilizing or even dropping. Think again. It will likely come as no surprise when we point out that the G-7 nations alone face a massive $7.3 Trillion (with a T) of sovereign-only maturities (and a further $566 Billion in interest payments) in 2012 alone. This incomprehensible number is worsened only in historical comparison as it's current level is 125% higher than was 'expected' at the end of 2010 (and 238% higher than was expected for 2012 at the end of 2009). As Bloomberg points out, Japan tops the list with $3.05tn (equivalent) followed the US at $2.76tn for 2012 as the former peaks in March 2012 (with $678bn due in that month alone) and the latter peaks in this month with January 2012 seeing over $480bn due to mature (and be rolled). But it gets worse for supply - global corporations (dominated by Financials relative to non-Financials), as noted by S&P today, have used the low interest rate environment to modestly relever and face almost $1 Trillion (again with a T) of maturing debt that will need to be rolled in 2012 (with January and March also topping the list) and over $3.1Tn in the next four years. So in the next four years, amid a slowing demand picture thanks to European worries, global corporate debt combined with G-7 sovereign debt maturing is an incredible $18.48 Trillion that will need to be rolled, rehypothecated, and have capital allocated to it (or not).

Debt loads are piling up in shorter and shorter maturities for the G-7.

...and from the end of 2009, expectations for 2012's debt load (maturing and needing to be rolled) has increased dramatically...


Breaking down the $7.3 trillion equivalent debt maturities for the G-7 across the year, we see January and March as critical...

Obviously Sovereign issuance dominates Corporate issuance but European New Bond Issuance for 2011 was dwindling as we ended the year...

which worries S&P greatly:

European Corporate Issuance Volume Remains Thin, Reflecting Continued Investor Worry

New corporate bond issuance in Europe continues to be very thin, reflecting the economic uncertainty that has characterized the region for the past few months. New deals through the first half of December totaled $20 billion. Of this, 85% were investment grade and 15% were not rated; there were no speculative-grade deals. In addition, the number of European companies issuing debt outside of Europe has increased, demonstrating difficulty in securing capital from within the region.


In November, the total new bond issuance in Europe was $43 billion. About 10% of this total is attributable to the European Financial Stability Facility (EFSF), an entity created to safeguard financial stability in Europe by providing financial assistance to member states.

As they see huge amounts of financial and non-financial debt needed to be rolled over the next few years...


All-in-all, the debt loads are becoming awesome and face what Bloomberg describes as a bad combination:

The buyer base for peripheral Europe has obviously shrunk at the same time that the supply coming to the market is increasing, which is not a good combination,” said Michael Riddell, a London-based fund manager at M&G Investments.


but we agree with the following that it will be mid-year (March onwards) that the real problems of excess supply hit (and pre-judging when this gets (or how much of this is) priced into forwards is anyone's guess):

Investors should be most worried about the period after the ECB’s second three-year longer-term refinancing operation scheduled in February, according to Ignis’s Thomson.

“The amount of liquidity that has been supplied by central banks, with more to come from the ECB in February, suggests the first couple of months will be a sort of phony war as far as the supply is concerned,” Thomson said.

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Everybodys All American's picture

Wait until they have to roll this again next year and then the next year and then... Well you know how this ends.

mn2's picture

it could be 16trillion the market will still go up.  Dont be fooled by negaive headlines

YesWeKahn's picture

And the folks who are holding these debts are at 50X leverage, pretty scary no?

mayhem_korner's picture



Ummm...what happens to those interest payments when yields go Greek?

HungrySeagull's picture

Force Majure I think.


Either the weight of the debt literal will tilt the earth past Solisce or melt the wires that carry the binary.

Can you imagine a market that needs a month to close instead of just a few hours?

Cognitive Dissonance's picture

The term "Go Greek" tickles the mind with all the different 'usages' that could be applied when interests rates you said, when interest rates go Greek.

I really must pull my head out of the opposed to my ass...ets. :>)

youngman's picture

They should be there now...we think in the old normal....the old school way..econ 101...but today...ben Prints to cover what we are not buying...there is a third team on the field.....and he does not play by our old rules...he makes his own up...they will and can never let rates go up...its over if they do...they know its print print print..and hopefully not everyone will sell at the same time so its looks "normal" to the rest of us...but if ther is a black swan event and people dump....well...that will be the new Normal NORMAL.....and no one knows what that will be like...

vote_libertarian_party's picture

So how much is NEW selling.  The US alone needs to find $1.5T in NEW money every year.  Japan about the same?  Europe about the same?

Even if the central banks QE what still needs to go to market?  Half?  A third?


You can't find enough buyers now and yet additional supply is still flooding the market.

Spacemoose's picture

please, correct me if i'm wrong but the bigger problem will be re-rolling the existing debt.  if i were an investor with 2 or 3 billion coming in from the maturity of a 3% instrument and one of my alternatives was to roll that back into 1% paper, i would seriously consider rebalancing my portfolio with more "real" assets and less gov. paper.  if everyone has the same thought, would this not cause a huge run up in equities, farm property, pm's and commodities? where is my reasoning flawed?



HungrySeagull's picture

Not flawed. Its the same as handing your oldest daughter over to the land lord to postpone your past due rent another month.

LawsofPhysics's picture

You missed the run up in farmland my friend.  I know of several areas that have seen up to a 500% increase in the price per acre over the last three years for farmland.  All fine and good if you can make the land productive.  Local governments in Kansas and Nebraska are drooling over the "predicted" tax revenue.  Seems these idiots just can not learn their lesson.  Big difference between predictions and reality.  There is also a big difference between paper investments and physical assets (of all kinds) that you can actually touch or that contribute directly to your survival.  Parity the world over is coming faster and faster.  If your country has a high standard of living, then there is only one direction for it to go (unless you actually know how to do things yourself).

DoChenRollingBearing's picture

I've read that Midwest farmland is in a huge bubble.

MachoMan's picture

Second the farm land runup...  probably a decade late to the party (maybe 5 years to be nice).  It has been creeping up for a long time, but the boom has happened in more recent years.

The neat part?  The 8 and 9 figure transactions I see aren't done on any leverage...

LawsofPhysics's picture

"The 8 and 9 figure transactions I see aren't done on any leverage..."

Another reason local governments are droolling, they assume the owners have money and will bring that to town, but if that is "paper" money and the land is still not productive, then it doesn't mean shit.

MachoMan's picture

Except for the ability to confiscate the land for taxes owed...

HungrySeagull's picture

I found out about it on a show called AG. It broadcasts early in the morning, very early and the last show was a eye opener.


There is so much going on in Farm and I don't know nothing. Except that around here Hay loads are going out while the live stock and horse owners weep.

cranky-old-geezer's picture



That's $8 trillion of wealth borrowed from people without their consent.

$8 trillion of wealth STOLEN actually, since it will never be paid back.

Anyone still wonder why the middle class is disappearing?

economics1996's picture

No, but explain to others why this is happening.

HungrySeagull's picture

Gavel in Congress, voice vote aye, gavel out and go home.


Easy enough.

earleflorida's picture

7billion people and growing ~100ml annually - gotta have US $$$'s to survive

earleflorida's picture


ask the Japanese -

the answer is there in broad daylight?

Dick Darlington's picture

But but but, debt=growth. Ask Krugman.

Zero Govt's picture

I do hope Krugman gets to the front line in Iran to test his economic theory of how War stimulates the economy (2 illegal wars and $Trillions of Govt bailouts still hasn't worked on the dead as a Dodo US economy)

tape him to the nose of a US warship Titanic-like as 40 kamazkazi Iranian powerboats approach at attack speed ...let's see how this pansies theories work out at the sharp end of his theoretical junk


JustObserving's picture

$8 trillion is enough to buy all the gold mined in human history - about 5 billion ounces.

That is why we cannot go back to the gold standard - too much paper currency, too little real money.

Dr. Engali's picture

That all depends on how gold is denominated.

DoChenRollingBearing's picture

+ 1  Absolutely right.


Gold could go VERY HIGH.  There is plenty of gold.  Before long, it will be harder to buy it though.

economics1996's picture

You figure $950 trillion bogus cash floating around and a $63 trillion economy?  Do the math.  Gold, if the money comes out to play, will be at $4,000 or $5,000 an ounce depending on the hysteria.

HungrySeagull's picture

Let's pretend the USA cashed out 8000 tons of gold from Fort Knox at 4thousand dollars.


It should come out to about 768 with 15 zeros. Would that be enough? I need a drink, head hurts.

DoChenRollingBearing's picture


Thought experiment:


The US Treasury announces that they will buy ANY and ALL gold for an arbitrary high price (say $5000 or $10,000 per oz).

Then not only are our debts much easier to cover, but the price of gold would likely be liberated...  That devalues the dollar, but what's a dollar worth in a world full of rehypothecation?

Winners:  Holders of gold.  .gov could pay down the debt.

Losers:  Anyone NOT holding gold.

HungrySeagull's picture

Well thinking on your experiment. If that day happens, things will move extrememly fast.

A mountain of gold will flow towards Uncle Sam within hours and hopefully the buyers are agile and fast enough to scoop up silver and other PM's because within hours or minutes Kitco's charts are going vertical.

Hopefully the seller of gold ounce to uncle sam and use the money to make it back on the back of other metals.

The following morning the Nation will see pricing across the board as to cause trouble. Paper will burn, Gold would be king.


And still the bill collectors call those who have none.

Dr. Engali's picture

I never could understand the argument that there is not enough gold. To me that shows a limited thinking capability.

HungrySeagull's picture

If you went around my area scooping up metal objects aka junk. You could send several railcar loads towards a foundry. What results from that will probably yeild a goodly amount of metal good for ship, ammunition or munitions.

economics1996's picture

Wrong.  In the past producers created profits by expanding production and lowering cost creating deflation, which is good for consumers.

Get the Keynesian BS out of your vocabulary and head.

I prefer free banking with both gold and silver used as the reserve.  Plenty of silver available.

NotApplicable's picture

This is without a doubt the most asinine argument against the gold standard, ever. All you're saying is that the relative valuations of gold vs. everything else is out of whack. Way out of whack. To state that they are so far out as to be incapable of reverting to the mean, is to not understand what the money supply is.

Dr. Engali's picture

Look at the pole on Drudge. Ron Paul is blowing everybody away in Iowa votes.

DoChenRollingBearing's picture

I added my vote for Ron Paul!  30.52%...

HungrySeagull's picture

I am not sure if I want Ron Paul.

I am holding my nose at all of them so far....


Ron Paul reminds me of "Fail Safe" or Dr. Strangelove

DoChenRollingBearing's picture

Fair enough

At least Ron Paul COULD and maybe WOULD do the following:


1)  Bring the troops home, shut down bases overseas, etc.

2)  Veto, veto, veto!  

3)  RP would likely shrink the government.

4)  Fewer bailouts, including sleazy "green enerrgy" companies.

HungrySeagull's picture

I wont mind bring in the troops from developed nations like German, England etc. There are Nations that can be allowed now that WW2 is over 60 years to handle thier own defense.


I dont mind a few detachments vital to our interests globally.


Veto against a hard headed Congress is going to cause the Media to go crazy, and the People to feel sick because no one can do anything in a Fiscal year until the final Veto, Veto override votes are in. Congress will fight. Even at night while we sleep.

I dont mind a little government shrinkage. The VA for example has seen a large increase in employee parking (More workers) to handle a large case load in longer time lines.


I swear, the private county hospital runs a full radiology department on demand JIT 24/7 with just a few people compared to a fully staffed VA nuclear clinic with dozens.


What is a bailout? Oh when the Solar companies go belly up?

Maybe the government best stay out of private enterprise unless vital for defense and so forth. What was that Nancy the speaker wanted? Oh yes, replace a few Light bulbs to save energy in that cold sink of a Capital Building.


I welcome further thoughts.


My biggest fear is Ron Paul will lose his temper like a old man would and ferociously sodomize the young suit carrying the Football and smash the button.

I hope that we dont have a nut on that button. A old line of thought from one who has lived the cold war years.

LawsofPhysics's picture

Just like the old schoolhouse rock segment "My Hero Zero".  They (paper-pushing financial fucknuts) will just keep adding zeros to thier own accounts, not yours.

Possession will be all that matters soon enough as infinite growth on a finite planet is impossible, sorry Krugman.

HungrySeagull's picture

And the tears will flow while sackcloth rent and ashes fall while everything goes negative into interger or fractional.


A little for you, some for you, a portion for you and .... some for all.

Where does that leave us? Less than zero.


Jubilee is the only way out. American style "Fuck it." hit the erase key and start over.

DoChenRollingBearing's picture


I keep hearing that word.  It could happen.

apberusdisvet's picture

a one quadrillion FRN would have to be double in size to hold all the zeroes and would be good for the economy:

New Wallets and purses for all

All men's pants would have to be changed

easier to start bonfires

Complete redo of all vending machines and cash registers



h/t Pual Krugman                         /sarc


Caviar Emptor's picture

It's like a global obesity epidemic, only for central banks. Each one is too embarrassed to admit their problem, but they wear "fat pants" wherever they go. And they keep blaming metabolism, the food, big bone structure, genetics, advertising, and everything but the problem itself

NotApplicable's picture

Well, thanks to ZIRP, it isn't like there are any consequences.

Say... are you gonna eat that?

HungrySeagull's picture

And add all the income these Obese people have managed to create a porn like industry based on people paying to watch you eat online.

ucsbcanuck's picture

Does anyone know a way to go long printers? Cos they are going to be busy this year...

DoChenRollingBearing's picture

Big printers use lots of bearings.  Go long bearings!

HungrySeagull's picture

You betcha.

Timkin for me. With great amounts of Grease because it's bitching heavy. Lube aint gonna cut it because we are not at high speed.

Races will need to be made from American Steel, none of that tin crap that comes in.


Instead of disposing the Dollars, throw them along with expended brass into the tumblers to make good clean bearings.