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. Last Updated: 07/27/2016

Borrowing in 1995 Soared to New Highs


Borrowing on international capital markets roared ahead for the fifth year in a row in 1995 to a record $1.26 trillion, the OECD said.

The volume of financing facilities arranged internationally leapt 30 percent over 1994's $968 billion total, marking one of the biggest yearly increases ever, the Organization for Economic Cooperation and Development said in a report.

"This remarkable performance was primarily due to a further surge in syndication of medium-term bank loans ... and in arrangement of programs for the issuance of medium-term euro-notes," the report, entitled Financial Market Trends, said.

The think tank of the world economic establishment said syndicated lending hit a "dazzling" $368 billion last year, up 56 percent from 1994. Euro-note medium term programs accounted for $341 billion, versus $222 billion.

International bond offerings, which fell in 1994 to $427 billion, staged a recovery to account for $461 billion, but international equity slid to $41 billion after a record $45 billion in 1994.

"The relative importance of straight bonds as a financing instrument continued to decline in 1995, when these bonds accounted for some 28 percent of all financing arranged," it said. "By contrast, the market share of syndicated credits reached 29 percent, making this the most important instrument on international markets."

The United States accounted for the lion's share of funds raised, accounting for $356 billion, up from $201 billion. Germany came in second with $128 billion versus $84 billion; third was Japan with $121 billion, up from $74 billion.

OECD countries, now 26 in number since the December entry of the Czech Republic, accounted for 89 percent of total borrowing; those beyond OECD frontiers made up for 9.6 percent, with international development institutions making up the rest.

South American countries, whose access to the international capital markets shrank after the Mexican financial crisis, rebounded later in 1995 to $13 billion.

Total international bond offerings by countries in eastern Asia slumped to $18 billion from $25 billion, although South Korea defied this trend to boost offerings to nearly $9 billion from just more than $5 billion, the report said.

Russia has so far stayed away from borrowing on international capital markets but could issue Eurobonds worth $2 billion in 1996, including $1 billion in the first half of the year. Russia owes the West about $130 billion.