First-Half 2010 Numbers Stronger, but Market Still Cautious

While most would argue that the U.S. economy has a way to go before it could be described as "strong," AFP continues to review data that shows the economy, business and financial markets are in much better shape than they were a year ago.

In the first half of 2010 U.S. loan issuance jumped 73 percent to $476 billion over the amount of business executed in same period in 2009. To put this number in perspective, the dollar amount in the first six months of 2010 represents more than 87 percent of the entire amount of issuance in all of 2009. On the other hand, the first-half issuance of 2010 represents about 50 percent of what was issued in the record-breaking first six months of 2007.

Once we get past the broad headline numbers, the story grows murkier. While there was growth when comparing 2Q10 to 1Q10, it came at a slower pace. All of the challenges of the second quarter—the sovereign debt crisis in Europe, questions about the economic momentum in the U.S., and uncertainty over regulatory and policy changes—certainly had a chilling effect on issuance.

A number of bond and loan deals were pulled, though some market participants feel this correction may have been a good thing, as the market may have gotten a little ahead of itself earlier in the year.

The market also is in a wait-and-see mode when it comes to longer tenor deals. There was some expectation in the beginning of the second quarter that the volume of 5-year deals would increase. Given the volatility of the quarter, this did not come to pass.

For more insight into the first half of the year, read this.

Brian Kalish is AFP's finance practice lead. Contact him via bkalish@afponline.org.