12 May 2017
London
Reporter: Drew Nicol

Lendable value at all time high


The value of lendable assets has broken through $17 trillion for the first time due to the persistent bull market, according to IHS Markit.

The record-breaking figure was chalked up in the opening days of May and is the result of a 15-month rally in inventory that saw the industry record a $3 trillion rise in lendable assets from the recent lows set in February of last year.

In an IHS Markit research note on the record, Simon Colvin said: “A deeper dive into this data shows that the nearly all of the recent rise in lendable inventory ($2.5 trillion) has come from equities, which have been the driving force behind the recent cash market rally.”

“Astonishingly, the value of equities in lending programmes is now over three times higher than the levels registered immediately after the financial crisis when a less than $3.5 trillion of equities sat in lending programmes.”

Colvin highlighted that Europe, Asia and North America all recorded a double-digit percentage rise in lendable inventory in the past 12 months.

Lendable bonds, which held up lending revenues as equities suffered in Q1 2017, did not match equities in value growth.

Colvin explained that bonds “registered a much more muted rise in inventory as the aggregate value of bonds available to borrow has only jumped by 8 percent over the past 15 months to $5.6 trillion”.

“Despite the recent rise in inventory, the value of bonds available to borrow still 15 percent off the levels registered before the financial crisis when $6.5 trillion of bonds were available to borrow.”

IHS Markit data shows that value of all loans outstanding has only risen by 3 percent since the inventory began to rise in earnest in February 2016.

Colvin continued: “Our long/short ratio, which looks at the ratio of inventory to loans across the securities lending industry, has never been higher as there are now over $10 in assets in lending programmes for every outstanding loan. This trend is much more pronounced in the equities world where every loan is backed by over $13.3 of inventory, up from 11.7 a year ago.”

More Industry news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Wematch welcomes first lenders to platform
23 October 2017 | London | Reporter: Drew Nicol
Digital broker Wematch.SecuritiesFinancing has secured its first two lenders
ISLA announces concerns about moratorium powers under BRRD
23 October 2017 | London | Reporter: Jenna Lomax
The letter expressed ISLA’s concerns that moratorium powers under the BRRD could severely reduce levels of liquidity
Merrill Lynch first to fall foul of UK’s EMIR reporting rules
23 October 2017 | London | Reporter: Drew Nicol
The bank accepted a £34.52 million penalty relating to 68.5 million unreported transactions between February 2014 and February 2016
Clearstream promises post-Brexit services continuity
19 October 2017 | London | Reporter: Jenna Lomax
Clearstream confirmed it will continue to offer stable custody services to its UK-based clients no matter how the Brexit negotiations evolve
EU commission lays down the law on MiFID II compliance
19 October 2017 | Brussels | Reporter: Jenna Lomax
Belgium, Malta, France, Greece, Luxembourg, Netherlands, Portugal, Spain and Sweden are among the 19 infringing member states due to face the commission’s wrath
AAOI and Euronav top FIS hot stocks lists
18 October 2017 | London | Reporter: Jenna Lomax
The Belgium-based operator of crude oil tankers and storage facilities, has been a regular feature on the list in the last month
BlackRock sees lending revenue growth
17 October 2017 | London | Reporter: Drew Nicol
BlackRock saw its securities lending revenue hit $150 million in Q3, compared to $142 during the same period in 2016