Last year sees best post-crisis annual lending revenues
24 January 2019 New York
Image: Shutterstock
Annual lending revenues were recorded at $10.7 billion, the best result post-crisis, according to Sam Pierson of IHS Markit鈥檚 review of securities finance for last year.
Pierson explained that emerging market demand, global credit uncertainty and central bank tightening were the primary drivers of securities lending in 2018.
He said: 鈥淎fter 2017, a year best defined by low volatility, 2018 was a marked divergence鈥攁 benefit than for asset owners that securities lending revenues delivered the best post-crisis return.鈥�
He continued: 鈥淏y way of comparison, total revenues for 2008 were $13.2 billion, but not having to go through a financial crisis to achieve 2018's $10.7 billion seems a fair tradeoff.鈥�
鈥淭he average global revenues over the last ten years have been $8.8 billion and the trend higher over the last two years has primarily been driven by increases in Asia and government bond demand.鈥�
Meanwhile, the road ahead looks bright with demand trending higher on the margin for US specials at the end of the year while demand for equity multiplier equities remains stable, Pierson predicted.
This is despite declining variations and corporate bond demand trending higher. The rate of increase for Asia and government bond lending revenues is slowing, however both still boasted impressive growth in 2018, Pierson cited.
He added: 鈥淢any of the demand drivers for 2018 are at least as relevant coming into the new year, which should make for a fruitful set of opportunities for 2019."
Pierson explained that emerging market demand, global credit uncertainty and central bank tightening were the primary drivers of securities lending in 2018.
He said: 鈥淎fter 2017, a year best defined by low volatility, 2018 was a marked divergence鈥攁 benefit than for asset owners that securities lending revenues delivered the best post-crisis return.鈥�
He continued: 鈥淏y way of comparison, total revenues for 2008 were $13.2 billion, but not having to go through a financial crisis to achieve 2018's $10.7 billion seems a fair tradeoff.鈥�
鈥淭he average global revenues over the last ten years have been $8.8 billion and the trend higher over the last two years has primarily been driven by increases in Asia and government bond demand.鈥�
Meanwhile, the road ahead looks bright with demand trending higher on the margin for US specials at the end of the year while demand for equity multiplier equities remains stable, Pierson predicted.
This is despite declining variations and corporate bond demand trending higher. The rate of increase for Asia and government bond lending revenues is slowing, however both still boasted impressive growth in 2018, Pierson cited.
He added: 鈥淢any of the demand drivers for 2018 are at least as relevant coming into the new year, which should make for a fruitful set of opportunities for 2019."
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