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Debt levels and flows
 
 
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Debt
Debt

Debt is that which is owed; usually referencing assets owed, but the term can cover other obligations. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned....
 is used to finance and pay for undertakings and business around the world. Debt levels are worth 3 years of GDP in many countries that have an annual GDP/person above $10,000. Worldwide debt levels are perhaps worth two or three years of GDP. GDP (at currency exchange rate) was $40 trillion during 2004. Debt levels may therefore be about $100 trillion.

$5.7 trillion of debt was issued in 2004 according to Thomson Financial
Thomson Financial

Thomson Financial was an arm of The Thomson Corporation, formerly one of the world's leading information companies, focused on providing integrated information solutions to business and professional customers....
 numbers, while GDP grew $4 trillion (currency exchange rate).






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Debt
Debt

Debt is that which is owed; usually referencing assets owed, but the term can cover other obligations. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned....
 is used to finance and pay for undertakings and business around the world. Debt levels are worth 3 years of GDP in many countries that have an annual GDP/person above $10,000. Worldwide debt levels are perhaps worth two or three years of GDP. GDP (at currency exchange rate) was $40 trillion during 2004. Debt levels may therefore be about $100 trillion.

$5.7 trillion of debt was issued in 2004 according to Thomson Financial
Thomson Financial

Thomson Financial was an arm of The Thomson Corporation, formerly one of the world's leading information companies, focused on providing integrated information solutions to business and professional customers....
 numbers, while GDP grew $4 trillion (currency exchange rate). That does not mean that debt grew faster than GDP on a worldwide average (even if it has done so for years after 2001 in the USA). Debt is often issued with a repayment plan (a "time to maturity" in some cases), repayment times may be between a few days (interbank cash flow management) and 50 years or longer (consumer real estate debt). The average repayment time of all worldwide outstanding debt is perhaps 10 years.

When debt matures new debt is many times issued to repay the old debt, perhaps from the same creditor. That is one reason why debt issuance far surpasses equity issuance in currency value. Equity is another way of financing business, as it has no set time to maturity and pays no set interest. It pays profit from the company it has a claim on.

Accounting

All credit is debt, a liability. Debt is created by lenders and borrowers agreeing to exchange the use of money for the promise to repay. The unit of money lent is the asset of the creditor and the liability of the debtor.

Notes are paper with terms of exchange, hence credits or access to money. All currencies are notes ("This note is legal tender for..."). Money is based on a fiat
Fiat currency

Fiat currency is money that exists because an authority or custom declares it to be money. . It achieves value because a government requires it in payment of taxes and says it can be used to pay debt or buy goods and services and because people trust that the value of the currency will be reasonably stable....
 whereupon all agree upon the exchange values of similar pieces of paper. This extends to savings and checking accounts which are depository receipts for money loaned to bankers who in turn lend it to other borrowers. And thus it multiplies, a deposit becomes a loan that becomes another deposit and so on.

The terms of the lending agreement are the key elements of the contractual terms of a promissory note regarding repayment including the amount(s) loaned and to be repaid, loan fees, time value and risk value interest charges, due dates, balloon payments, default terms and more. All material information should be disclosed on financial statements or footnotes.

Flows


2004

Worldwide debt
Debt

Debt is that which is owed; usually referencing assets owed, but the term can cover other obligations. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned....
 and equity
STOCK

Software for fixed assets management and stock control developed in 2004. Stocktaking process is carried using a hand-held mobile terminal equipped with barcode reader or RFID technology....
 underwriting
Underwriting

Underwriting refers to the process that a large financial service provider uses to assess the eligibility of a customer to receive their products ....
 reached a record $5.69 trillion. Worldwide debt underwriting grew 4.3% year-over-year to $5.19 trillion. Syndicated lending was up 34.3% year-over-year. worldwide high-yield corporate debt climbed to over $163 billion eclipsing the previous record of $150 billion set in 1998. US Asset-backed securities
Asset-backed security

An asset-backed security is a Security whose value and income payments are derived from and collateralized by a specified pool of underlying assets....
 volume increased 41.7% to $857 billion.

Worldwide equity & equity-related issuance totaled $505bn for the year, representing a 29.9% increase over the $389bn raised in 2003. Initial public offerings increased nearly 220%.

2003

Worldwide Debt, Equity and Equity-related issuance reached record-breaking levels with over $5 trillion in proceeds raised, surpassing 2001’s record of $4.4 trillion. The $5 trillion of borrowings represented 14% of the GDP flow during the year (4.938/36.3) (see world economy
World economy

The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways . It is inseparable from the Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any considerati...
). 93% of the issuance was debt, 7% was equity. Note that these numbers don't include all mortgage borrowing, which was $3.8 trillion in the United States during 2003. $900 billion of it is in mortgage-backed securities
Mortgage-backed security

A mortgage-backed security is an asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans....
, at least $546 billion in US Federal Credit Agency.

Flows

Flows mean issued and sold debt. Debt and equity issuance reported by Thomson Financial
Thomson Financial

Thomson Financial was an arm of The Thomson Corporation, formerly one of the world's leading information companies, focused on providing integrated information solutions to business and professional customers....
 () ($ billions and number of issues).

Worldwide Debt, Equity & Equity-related
  • 2004: 5,693 (20,066) (Q4 2004 report)
  • 2003: 5,326 (19,706) (Q4 2003 report)
  • 2002: 4,257 (Q4 2003 report)


Worldwide Disclosed Fees
  • 2004: 15.401 (6,890) (Q4 2004 report)
  • 2003: 14.461 (8,023) (Q4 2003 report)
  • 2002: 14.762 (6,696) (Q4 2003 report)


Worldwide Equity and Equity-related
  • 2004: 505 (3,628) (Q4 2004 report)
  • 2003: 388 (2,418) (Q4 2003 report)
  • 2002: 319 (Q4 2003 report)


Worldwide Debt
  • 2004: 5,187 (16,439) (Q4 2004 report)
  • 2003: 4,938 (17,287) (Q4 2003 report)
  • 2002: 3,938 (Q4 2003 report)


Worldwide High Yield Corporate Debt
  • 2004: 163 (606) (Q4 2004 report)
  • 2003: 146 (524) (Q4 2003 report)
  • 2002: 63 (Q4 2003 report)


Worldwide Loans (syndicated, leveraged)
  • 2004: 2,640 (7,147) (Q4 2004 report)
  • 2003: 1,966 (Q4 2004 report)
  • 2002: ? (Q4 2003 report)


Europe

All Euromarket Issues
  • 2003: 1,397 (3,568) (Q4 2003 report)
  • 2002: 877 (2715) (Q4 2002 report)


European Leveraged Loans
  • 2003: 107 (222) (Q4 2003 report)
  • 2002: ? (Q4 2002 report)


United States


US Investment Grade
Investment grade

A Bond is considered investment grade or IG if its Bond credit rating is BBB- or higher by Standard & Poor's or Baa3 or higher by Moody's or BBB or higher by DBRS....
  • 2003: 659 (1,868) (Q4 2003 report)
  • 2002: 549 (Q4 2003 report)


All US Federal Credit Agency Debt. FHLB dominated the agency market in 2003, raising $545.5 billion in proceeds, a 35% increase in volume from 2002.
  • 2003: 1,191 (13,152) (Q4 2003 report)
  • 2003: 923 (Q4 2003 report)


US Mortgage-backed Securities
Mortgage-backed security

A mortgage-backed security is an asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans....
  • 2003: 900 (1,203) (Q4 2003 report)
  • 2002: 805 (Q4 2003 report)


US Asset-backed securities
Asset-backed security

An asset-backed security is a Security whose value and income payments are derived from and collateralized by a specified pool of underlying assets....
  • 2003: 581 (1,175) (Q4 2003 report)
  • 2002: 456 (Q4 2003 report)


US Syndicated Loans
  • 2003: 980 (2,962) (Q4 2003 report)
  • 2002: 1,051 (Q4 2003 report)


US Leveraged Loans
  • 2003: 368 (1,549) (Q4 2003 report)
  • 2002: 344 (Q4 2003 report)


Levels

Levels mean market or balance sheet
Balance sheet

In financial accounting, a balance sheet or statement of financial position is a summary of a person's or organization's balances. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year....
 liability of borrowing party (or asset of lending party) value. Numbers are end-of-year levels, unless otherwise stated.

Euro area

Credit market debt
  • 2003: ?
Households
  • 2004: 86% of households’ gross disposable income
Non-financial corporations
  • 2003: 78.9% of GDP
Government
  • 2003: 70.7% of GDP


Japan

Credit market debt
  • 2003: ?
Households
  • 2003: 110.5% of households’ gross disposable income
Non-financial corporations
  • 2003: 110.5% of GDP
Government
  • 2003: 141.3% of GDP


United States

Dollar amounts are debt owed by each sector (amounts borrowed by each sector)

Credit market debt
  • 2008/Q1: $49.6 trillion (349% of GDP)
Household sector
  • 2008/Q1: $13,959.9 trillion (99% of GDP) (% of "households’ gross disposable income")
Domestic Financial sectors
  • 2008/Q1: $15.9 trillion (112% of GDP)
Nonfinancial corporate business
  • 2008/Q1: $6.474 trillion (46% of GDP "Non-financial corporations")
Nonfarm noncorporate business
  • 2003: $2.241 trillion
Farm business
  • 2003: $208 billion
Government
  • 2008/Q1: $7.470 trillion (52.6% of GDP "Government")
Federal government
  • 2008/Q1: $5.244 trillion
State and local governments
  • 2008/Q1: $2.226 trillion


See also

  • Bond (finance)
    Bond (finance)

    In finance, a bond is a debt security , in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest and/or to repay the principal at a later date, termed Maturity ....
  • Bond market
    Bond market

    The bond market is a financial market where participants buy and sell debt security , usually in the form of bond . As of 2006, the size of the international bond market is an estimated $45 trillion, of which the size of the outstanding U.S....
  • Debt
    Debt

    Debt is that which is owed; usually referencing assets owed, but the term can cover other obligations. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned....
     (loan
    Loan

    A loan is a type of debt. This article focuses exclusively on monetary loans, although, in practice, any material object might be lent. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the wiktionary:lender and the wiktionary:borrower....
    , credit
    Credit (finance)

    Credit is the provision of resources by one party to another party where that second party does not reimburse the first party immediately, thereby generating a debt, and instead arranges either to repay or return those resources at a later date....
    )
  • Debt market (credit market)
  • Equity market
  • Fixed income
    Fixed income

    Fixed income refers to any type of investment that yield s a regular return.For example, if you lend money to a borrower and the borrower has to pay interest once a month, you have been issued a fixed-income security ....
  • Government debt
    Government debt

    Government debt is money owed by any level of government; either central government, federal government, municipal government or local government....
  • Securitization
    Securitization

    Securitization is a structured finance process, which involves Pooling and Security #Repackaging of cash flow producing financial assets into Security that are then sold to investors....
  • Structured finance
    Structured finance

    Structured finance is a broad term used to describe a sector of finance that was created to help transfer risk using complex legal and corporate entities....
  • World economy
    World economy

    The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways . It is inseparable from the Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any considerati...
  • Eurodad
    Eurodad

    Eurodad is a network of 56 non-governmental organisations from 17 European countries. Eurodad and its members make up a network, this network researches and works on issues that are related to debt, development finance and poverty reduction....


Lists

  • Thomson Financial league tables
    Thomson Financial League Tables

    Thomson Financial's standard league tables are rankings of Investment Banks in terms of the dollar volume of deals they work on. New standard league table sessions in compliance with 2004 league table criteria for Debt, Stock, Syndicated loan, Project Finance and M&A are currently available....


External links


International


Thomson Financial


Europe


ECB


United States



Federal Reserve