Government Bond Data Report Q4 2021 and Full Year 2021 | AFME

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Data Research
Government Bond Data Report Q4 2021 and Full Year 2021
24 Mar 2022
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Author Julio Suarez Director
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This report provides a comprehensive data source with updated statistics on the Government bond primary and secondary markets in Europe (EU+UK).

Report highlights include:

  • European sovereign bond issuance continues above pre-pandemic levels: in 2021, European sovereign bond issuance, including issuance from EU Member States, the UK and the European Commission, accumulated EUR 3362.3 bn in proceeds, 8.3% below 2020FY but 41.9% above 2019FY.
  • In Q4 2021, EU Member State and UK bonds and bills issuance accumulated EUR 624 bn, which represents a decrease of 19.4% (QoQ) compared to 3Q21, but an increase of 1.3% (YoY) compared to 4Q20.
  • In 2021FY, European government bond trading increased 0.2% compared to 2020, but was up 8.7% compared to 2019, according to MarketAxess. During Q4 2021, EU quarterly traded volumes increased 4.7% (QoQ) and 6.4% (YoY).
  • Outstanding amount of EU ESG government bonds surpassed EUR 240.0 bn during 4Q21 of which EUR 28.0 bn in green bonds and EUR 0.6 bn in sustainable bonds were issued. Volumes were driven primarily by the European Commission (EUR 12.0 bn), the UK (EUR 7.7 bn), Italy (EUR 5.0 bn) and Germany (EUR 3.0 bn), which contributed to outstanding volumes of European green government bonds increasing to EUR 147.8 bn.
  • Net loss of 7 primary dealers in Europe during June 2021-January 2022. There were 13 exits and 6 entries of banks to the European Primary Dealer system during this period, affecting sovereign debt markets in 11 countries and also the European Commission Primary Dealer Network (EU PDN).
  • Market-implied Eurozone inflation expectations spiked following ongoing geopolitical tensions while inflation expectations inverted with 1Y inflation expectations exceeding both 5Y and 10Y. Eurozone inflation expectations continued to rise in 4Q21 and recently spiked during 1Q22 due to the increased level of economic uncertainty as a result of the ongoing conflict in Eastern Europe.
  • During 4Q21 there were 2 long-term credit rating upgrades for European countries and no downgrades. This follows 1 upgrade and no downgrades in 1Q21, 1 upgrade and no downgrades in 2Q21, 3 upgrades and no downgrades in 3Q21, bringing the 2021 full year total to 7 upgrades and no downgrades.