November 27, 2011
The funding hole for European banks is deepening following a sharp fall in bond issuance this year as market turmoil leads to a region-wide credit crunch.
European banks have sold $413bn worth of bonds this year, equivalent to just two-thirds of the $654bn that is due to be returned to investors in 2011 as the debts mature, according to data compiled for the Financial Times by Dealogic.
That leaves the banks with a $241bn funding gap in 2011, the first time European lenders have collectively been unable to replace their maturing debt with new bonds for at least the past five years.
Investors say they have been deterred from buying bank bonds because of uncertainty over the financial health of some banks, the fate of the eurozone and the impact of new financial regulation. The funding freeze has raised fears about the knock-on effects for companies reliant on bank funding and the broader economy.