Capital Markets

Global, Public-Backed Debt Tops $317B

The U.S. accounts for half the world's government-guaranteed debt issued since several programs were implemented last fall, according to newly comp...
Sarah JohnsonFebruary 17, 2009

Less than half a year after various governments changed their policies to boost investors’ faltering confidence in banks, financial institutions have issued $317 billion in debt backed by the government, according to data from Thomson Reuters. This number accounts for 15 percent of the total debt issued worldwide since the fall.

Moreover, half of government-backed debt activity between issuers and borrowers has happened in the United States, because of the Temporary Liquidity Guarantee Program, created by the Federal Deposit Insurance Corp. last October. The program guarantees newly issued senior unsecured debt issued by banks, thrifts, and some holding companies.

Following behind the U.S. lies the UK and France, each of which makes up about 12 percent of activity surrounding government-backed debt since October, Thomson Reuters reported in its study.

However, a French state-owned institution created to provide loan guarantees has been the largest issuer of government-sponsored debt. The agency has made five issues since the fall totaling $34 billion. General Electric’s finance arm come in second with 13 government-backed issues totaling $25 billion, followed by Bank of America ($21 million), J.P. Morgan Chase ($21 billion), and Citigroup ($20 billion).

JPMorgan, Bank of America, and Citigroup have received the most book-running business for the government-secured issuances. JPMorgan, for example, has advised 34 deals worth a total of $38 billion.

The FDIC will drop its temporary coverage of unsecured debt in June 2012, but industry watchers predict lawmakers will extend that date.