February 2001
Frequent issuers prosper through innovation
The world's largest non-sovereign borrowers made further efforts to position their bonds as alternatives to increasingly rare sovereign issues in 2000. Futures on US agency bonds began trading, borrowers stuck to calendars in volatile markets and embraced the internet.
In 2000 the two largest non-sovereign issuers were once
again the big US mortgage agencies, Freddie Mac and Fannie Mae. The
sheer size of their funding requirements is breathtaking.
Freddie Mac's issuance programme alone totalled $935 billion last
year, of which $9 billion equivalent was issued as part of its euro
reference notes programme.
The agencies' adherence to detailed issuance calendars enhanced
their bonds' usefulness for traders and others in hedging interest
rate risk. The growth of futures markets on their bonds reinforces
their status as alternatives to government bonds. That's just as
well because the agencies faced tough questions from the US
congress and from investors about their true credit status and
degree of government support.
For supranationals innovation last year centred around the
application of internet technology to the primary bond markets,
with the European Investment Bank and the World Bank in particular
making great efforts to jump...
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