European Capital Markets with a Single Currency

By Jean Dermine; Pierre Hillion | Go to book overview
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1. lntroduction

In the thirty-five years since the first Eurobond issue, the global securities market has changed beyond recognition. But the first issue, a US$15 million bond issued by Autostrade, the Italian state highway system, began an irreversible process of capital market development that has been of great importance to the growth and development of European (and non-European) public and private sector institutions. At the end of 1996, the total market capitalization of all European debt and equity securities exceeded US$11,800 billion, or approximately 28 per cent of the total global value of all outstanding securities. Approximately US$7,600 billion of these outstanding securities were debt issues, and US$4,200 billion were equities. See Table 10.1.

This progress is also reflected in the increasing importance of debt securities issued in Euromarket transactions in several different categories. During 1996, new issues of Eurobonds exceeded US$500 billion, an amount greater than the volume of new issues of corporate debt securities in the United States, a distinction the Euromarket also earned in three of the preceding four years. In addition to Eurobonds, US$380 billion of Euro-medium-term notes (EMTNS) were also issued, as compared to US$250 billion of such notes in the United States.1 In 1996, the total volume of 'international'

Table 10.1. Capitalization of major securities markets, end-1996 (nominal value outstanding; US$ bn.)
Country of issuance
Bond market
Sources: Salomon Brothers; 1996 Securities Industry Fact Book.
Equity market Total market
Public sector Private sector
USA 6,366 3,217 8,484 18,067
Japan 2,246 1,410 3,089 6,745
Germany 839 1,464 671 2,974
Italy 998 276 258 1,532
France 732 312 591 1,635
UK 448 214 1,740 2,402
Canada 313 133 486 932
Netherlands 200 201 379 780
Other European 992 925 550 2,467
Other non-European 200 50 3,911 4,161
Total 13,334 8,202 20,159 41,695
Total European 4,209 3,392 4,189 11,790
European % 32 41 21 28
Similar to Eurobonds, medium-term notes are unsecured corporate obligations of from one to ten years in maturity which are usually sold off-the-shelf on a 'tap' issue basis using standardized documentation by banks which underwrite their sale.


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