3 Issuing costs of state guaranteed bonds - Financial Risk and ...

2 Overview of state guarantee schemes
State in the absence of intervention. Additionally, the policy approach foresaw regular monitoring
of economic conditions as any interventions should be temporary by nature and relate only to the
duration of the crisis situation.
The sections below provide a more detailed overview of trends in the use of state guarantees.
2.2 Patterns of issuance activity
2.2.1 Issuance activity over time
Between October 2008 and December 2010 close to 1,000 SG bond issues worth over €500bn
were brought to market by banks with EU Member States acting as guarantors.
The pattern of issuance activity over time is shown in Figure 1 below. During the first nine full
months of the period under study (Nov-2008 – Jul-2009), almost 50% of issuances took place,
rising from 16 in November 2008 to a peak of 94 in June 2009. On average, over 50 SG bond issues
were brought to market per month. Subsequently, the number of new SG bond issues fell to an
average of slighter more than 35 per month. And finally, only a small level of issuance activity took
place in the second half of 2010. The value of issuance activity over time is also shown in Figure 1.
This further illustrates that the main period of issuing activity was Nov-2008 – Jul-2009, accounting
for over 50% of the total value of SG bonds issued.
Figure 1: Pattern of SG bond issuance activity, number of bond issues (#) and value of bond
issues (€mn), Oct-08 - Dec-10
16
Issuance volume, €m
0 20000 40000 60000 80000 100000
Source: Bloomberg
Jan-2009 Jul-2009 Jan-2010 Jul-2010 Jan-2011
Issuance volume Issuances
Given the volume of SG bond issuance activity, one might be concerned that there may be adverse
spill-over effects impacting negatively other issuance activity. Panetta et al. (2009) investigate this
0 20 40 60 80 100
Issuances, #