KUALA LUMPUR (Jan 18): Global bond issuance in 2018 is expected to decrease by 0.4%, according to S&P Global Fixed Income Research.

In a statement today, S&P Global Ratings cited an article titled "Global Issuance And Financing Conditions: Bond Issuance Is Expected To Decline By 0.4% To $6.2 Trillion In 2018" and said a large decline in US public finance will likely be offset by increases in global structured finance and financial services.

"Meanwhile, we expect a slight decline among nonfinancial corporates, which face modest headwinds in the U.S. via tax reform and have a difficult act to follow in 2017's global totals," said head of S&P Global Fixed Income Research Diane Vazza.

Vazza noted that borrowing costs remain muted in the US and Europe, in many cases reaching historical lows over the past two years.

The current favourable lending conditions in these regions are expected to extend into the first half of this year, with increased potential for more restrictive conditions later in the year.

“Geopolitical risks to bond issuance in 2018 are already coming to the fore, with many countries facing upcoming elections (or coalition building) in Europe and Latin America,” she said.

Tax reform in the US has become law and includes potentially debt-deterring provisions, said S&P.

S&P pointed out that the Brexit process will soon start addressing more difficult and crucial topics in a substantive way, and a developing issue surrounding China's future Treasury purchases may also cause market disruption.