It is a natural human condition to hanker after times gone by, thinking them simpler and less stressful than the present. But the truth is often not that things were so much better, just that whatever the circumstances threw up was dealt with and the mechanics of how exactly that was achieved is now a distant memory.
That could well be what many within the capital markets community are hoping will be the case as far as the current situation is concerned, given that those tasked with navigating their way through increasingly choppy waters are unlikely to be doing so with a sense of glee.
Having to raise funding, for example, in such circumstances as currently exist is certainly no easy mission. And it is those in the sovereign, supranational and agency arena that are at the forefront, given the scale of their requirements.
The Covid-19 pandemic created numerous previously unimaginable hurdles that had to be overcome, ushering in a period of ultra-low interest rates that in itself created a demanding funding environment as buyside and sellside looked to balance their needs. But that has been replaced by challenges on the other side of the rates coin.
Inflationary pressures were already beginning to emerge in the global economy before Russia's invasion of Ukraine sent energy prices spiralling higher. The quest to defeat the inflation that has since seeped into the entire system has seen central banks around the globe embark on a policy of aggressive interest rate hikes that has still not run its course. Add to that the removal of the quantitative easing measures that looked to smooth the raising of debt during the coronavirus years and you are left with a situation that is only going to exacerbate rising bond yields.
But that is not the only challenge facing market participants who have committed themselves increasingly to following an ESG path – both issuers and investors. All are united in their belief that such an undertaking is of paramount importance and it is a mantra repeated in every corner of the globe. But to achieve that goal against a backdrop of volatile interest rates, inflationary pressure and disrupted fuel and food supply, to name but a few, will be no mean feat.
Each market, be it currency or geography, has its own agenda and each will do its best to maintain an element of superiority. But, for all the competition, there does appear to be a collective will to succeed and a realisation of the importance of doing so. These may be choppy waters to navigate but a collaborative approach might just calm the journey.
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