Warning default rates to rise in UK corporate bond market as issuance trebles to nine-year high

Issuance rose to £22.1bn in 2017/8

The risk of rising default rates in the UK corporate bond market is set to increase as issuance of the debt the trebled to a nine-year high last year, according to specialist debt adviser Hadrian's Wall Capital.

Data from the firm shows there is a historical correlation between the level of corporate bond issuance and default rates, and when issuance rises this tends to reflect in defaults. For example, the rising UK corporate bond issuance in 2008/09 was matched by a period of high global default rates, with $233bn in corporate bond defaults in 2008 and $184bn in 2009, according to data from Moody's Investors Service, while it was just $52bn in 2017, a year when UK corporate bond issuance was low. However, in the year to October 2018, UK corporate bond issuance rose to £22.1bn, up from just ...