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SCOREBOARD
2016
OECD Business and Finance
2016 OECD Business and Finance Scoreboard
OECD Business and
Finance Scoreboard 2016
This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed
and arguments employed herein do not necessarily reflect the official views of OECD member countries.
This document and any map included herein are without prejudice to the status of or sovereignty over any
territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or
area.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The
use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli
settlements in the West Bank under the terms of international law.
© OECD 2016
3
ABOUT THE OECD BUSINESS AND FINANCE SCOREBOARD
The OECD Business and Finance Scoreboard accompanies the OECD Business and Finance
Outlook by providing a commented overview of selected indicators and data related to corporate
performance, banking, capital markets, pensions and investments. While some of the indicators and
developments are subject to in-depth analysis in the Outlook, others appear only in the Scoreboard,
giving the reader complementary information and additional opportunities for analysis.
The Scoreboard makes use of data that is collected directly by the OECD as well as calculations
that are based on information available in different external databases. A detailed description of the
methodology for data collection and analysis is provided in the annex.
The indicators and data that feature in this edition of the Scoreboard, primarily reflect the focus
of the 2015 and 2016 OECD Business and Finance Outlooks. Going forward, the objective is to
establish a useful balance between relevant standardised indicators to be tracked over time and
quantitative information that primarily is tailored to support the policy themes that will be addressed in
subsequent editions of the Business and Finance Outlook.
4
5
Table of contents
About the OECD Business and Finance Scoreboard................................................................. 3
Acronyms and abbreviations ..................................................................................................... 8
Editorial ..................................................................................................................................... 9
Global trends in productivity................................................................................................... 11
Declining investment opportunities......................................................................................... 12
Greater capital expenditure in emerging economies................................................................ 14
A global surge in corporate bond issues .................................................................................. 16
The maturity divergence.......................................................................................................... 17
An increase in emerging market use of public equity markets................................................ 18
A decline in initial public offerings by small companies ........................................................ 19
Public equity markets remain an important source of continuous financing........................... 20
New industrial sectors using corporate bonds ......................................................................... 21
Sectoral trends in the use of public equity markets ................................................................. 22
A decline in overall corporate bond ratings............................................................................. 23
The decline in corporate bond covenant protection................................................................. 24
Distance-to-default has fallen.................................................................................................. 26
A measure of the value of implicit guarantees for the debt of large banks.............................. 27
Bank beta indicator.................................................................................................................. 28
Pension funds’ investments fell slightly in 2015 relatively to 2014........................................ 30
The low returns in 2015 mostly explain the fall in pension funds’ investments ..................... 31
Negative returns in stock markets may be behind the weak performance
of pension funds’ investments in 2015.............................................................................. 32
Global trends in FDI flows ...................................................................................................... 33
Equity capital FDI flows surged in 2015................................................................................. 34
Capital passing through Special Purpose Entities (SPEs) dropped significantly
in 2014 and 2015............................................................................................................... 36
Pace of liberalising regulatory restrictions on FDI has slowed in recent years ....................... 39
Shifting view of the origin of FDI: Investors hold investments indirectly through
Luxembourg and the Netherlands..................................................................................... 42
Global trends in mergers and acquisitions............................................................................... 44
Openness of banking systems.................................................................................................. 46
Saving-investment correlation................................................................................................. 48
ANNEX: Methodology for data collection and analysis......................................................... 49
6
Figures
Figure 1. Productivity measures for listed non-financial companies, 2002–2015 .................................11
Figure 2. Return on equity, cost of equity and cost of capital, 2002–2015............................................12
Figure 3. Listed non-financial company corporate finance data, 2002–2015 ........................................14
Figure 4. Outstanding stock of non-financial corporate bonds, 2000–2015 ..........................................16
Figure 5. Average maturities for corporate bonds issued by non-financial companies, 2000–
2015 ........................................................................................................................................17
Figure 6. Initial public offerings (IPOs), 2000–2015.............................................................................18
Figure 7. Small non-financial company IPOs in advanced economies, 1994–2015 ..............................19
Figure 8. Secondary public offerings in advanced and emerging economies, 2000–2015 ....................20
Figure 9. Corporate bond issuance by companies in energy, industrials and materials sectors,
2000–2015 ..............................................................................................................................21
Figure 10. Distribution of public equity financing among different sectors, 2000–2015 ......................22
Figure 11. Rating quality and new supply of corporate bonds, 2000–2015...........................................23
Figure 12. Covenant protection index for corporate bonds issued in the United States, 2000–
2014 ........................................................................................................................................24
Figure 13. Distance-to-default (DTD) of large listed banks, 1999–2016...............................................26
Figure 14. Credit rating uplifts for the debt of large banks, 2007–2015................................................27
Figure 15. Bank beta indicator for large listed banks, 1999–2016.........................................................28
Figure 16. Pension funds' real net investment rate of return in selected OECD countries,
2014–2015 ..............................................................................................................................31
Figure 17. Pension fund asset allocation in selected asset classes in selected OECD countries,
2015 ........................................................................................................................................32
Figure 18. Foreign direct investment inflows by region, 2005–2015 ....................................................33
Figure 19. Foreign direct investment by instruments, 2005–2015.........................................................34
Figure 20. Total FDI outflows from selected OECD countries with resident SPEs, 2005.....................36
Figure 21. Total FDI inflows to selected OECD countries with resident SPEs, 2005–2015 .................36
Figure 22. OECD FDI Regulatory Restrictiveness Index, 1997–2015 ..................................................39
Figure 23. Inward FDI positions by major ultimate partners versus immediate partners ......................42
Figure 24. Domestic and Cross-Border M&A deals, 1997–2015 ..........................................................44
Figure 25. Deviations from covered interest parity (CIP) on domestic forward (DF) and non-
deliverable forward (NDF) markets, 2015..............................................................................46
Figure 26. Saving-investment correlation, 1981–2015 ..........................................................................48
7
Tables
Table 1. Average value added and net sales data for listed companies, 2002–2015..............................11
Table 2. Average return on equity, cost of capital and debt data for listed companies, 2002–
2015........................................................................................................................................13
Table 3. Key financial data for non-financial listed companies, 2002–2015.........................................15
Table 4. Outstanding stock of corporate bonds, 2000–2015..................................................................16
Table 5. Average maturities for corporate bonds, 2000–2015...............................................................17
Table 6. Initial public offerings, 2000–2015..........................................................................................18
Table 7. Small non-financial company IPOs in advanced and emerging economies ............................19
Table 8. Secondary public offerings, 2000–2015 ..................................................................................20
Table 9. Distribution of corporate bond issuance among different sectors, 2000–2015........................21
Table 10. Distribution of public equity financing among different sectors, 2000–2015 .......................22
Table 11. Distribution of corporate bond issuance among rating categories, 2000–2015.....................23
Table 12. Frequency of different types of corporate bond covenants, 2000–2014................................25
Table 13. Average distance-to-default (DTD) of large listed banks, 2003–2016..................................26
Table 14. Average beta calculated using MSCI regional equity indices for large listed banks,
2003–2016..............................................................................................................................28
Table 15. Average beta calculated using MSCI global equity index for large listed banks,
2003–2016..............................................................................................................................29
Table 16. Total investment of pension funds and all retirement vehicles, 2015....................................30
Table 17. Pension funds' real net rate of investment returns in selected OECD countries,
2005–2015..............................................................................................................................31
Table 18. FDI inflows by selected regions, 2005–2015.........................................................................33
Table 19. FDI outflows by selected regions, 2005–2015.......................................................................33
Table 20. FDI inflows and outflows by instrument for selected regions, 2005–2015 ...........................35
Table 21. FDI outflows for countries with SPEs, 2005–2015 ...............................................................37
Table 22. FDI inflows for countries with SPEs, 2005–2015 .................................................................38
Table 23. OECD FDI Regulatory Restrictiveness Index, OECD countries per sector, 2015 ................40
Table 24. OECD FDI Regulatory Restrictiveness Index, Non-OECD countries per sector,
2015........................................................................................................................................41
Table 25. Inward FDI positions by Immediate (IMD) versus Ultimate (ULT) partner country............43
Table 26. Inward FDI positions by Immediate (IMD) versus Ultimate (ULT) partner country
for selected OECD countries..................................................................................................43
Table 27. Domestic and Cross-Border M&A deals, 1997–2015 ...........................................................45
Table 28. Deviations from covered interest parity (CIP) on domestic forward (DF) markets,
2006–2015..............................................................................................................................47
Table 29. Deviations from covered interest parity (CIP) on non-deliverable forward (NDF)
markets, 2006–2015 ...............................................................................................................47
Table 30. Saving-investment correlation by region, 1986–2015 ...........................................................48
8
Acronyms and abbreviations
BRICS Brazil, Russia, India, China, and South Africa
BRIICS Brazil, Russia, India, Indonesia, China, and South Africa
CAPEX company capital expenditure
CIP covered interest parity
COD cost of debt
COE cost of equity
COK cost of capital
DF domestic forward
DTD distance-to-default
EBITDA earnings before interest, taxes, depreciation and amortisation
EME emerging market economy
FDI foreign direct investment
GARCH Generalized Auto Regressive Conditional Heteroskedasticity
GICS Global Industry Classification Standard
IG investment grade
IPO initial public offering
M&A mergers and acquisitions
MSCI Morgan Stanley Composite Index
NDF non-deliverable forward
OECD Organisation for Economic Co-operation and Development
R&D research and development
REIT real estate investment trusts
ROE return on equity
SPEs special purpose entities
SPO secondary public offering (follow-on offering)
9
Editorial
Despite the fact that the interest rates have been kept at record lows since the financial crisis, the
world economy is still beset with major headwinds. As a consequence, there is little doubt that the
journey towards economic recovery increasingly has to rely on structural adjustments. Of particular
importance is the ability of the corporate sector to adjust to the reversal of the commodity supercycle
through a combination of orderly creative destruction and corporate strategies that promote productive
investments.
From a policy perspective, these challenges call for a better understanding of the relationships
between business behaviour and macroeconomic conditions. Notably, how monetary regimes and
regulatory reforms influence the decisions of both investors and corporations to focus on long term
value creation.
This Scoreboard provides indicators that will help policy makers to monitor changes in business
behaviour that influence firm level performance and productivity. This includes indicators of how
they use productivity enhancing strategies such as research and development, cash flow management
and corporate restructuring. It also contains indicators of how, and to what extent, corporations use
market based finance, such as equity and corporate bonds.
One important indicator of how effectively corporations use the capital that they have at their
disposal is the return-on-equity. Building on a global sample of about 11.000 large listed companies,
the Scoreboard shows that return-on-equity minus the cost-of-equity has fallen. In the last couple of
years it has even been negative in emerging markets, which indicates the existence of excess capacity
and the need for structural adjustments.
Access to equity capital is essential for long term investments, such as innovation and product
development; particularly for smaller growth companies. However, the amount of new equity capital
that corporations raised through initial public offerings (IPOs) declined in 2015. And while the
number of IPOs by growth companies in advanced economies slightly increased, the total amount of
new equity capital that they raised actually declined and remains at a low level. Considering the
consistently low level of growth company IPOs in the last decade, more can probably be done to
increase their access to public equity markets.
Bonds have become an increasingly important source of finance for corporations worldwide and
the stock of outstanding corporate bonds continued to increase in 2015. At the same time, the overall
rating quality of corporate bonds remains considerably lower than before the 2008 financial crisis.
This is mainly an effect of the high share of non-investment grade bonds and B-grade bonds being
issued. The covenant protection index for non-investment grade corporate bonds also remains at a low
level, indicating that investors in their search for yield are still willing to forego certain governance
rights.
10
Analysis of firm level data in the OECD Business and Finance Outlook suggests that some
companies with high productivity growth may use mergers and acquisitions to rationalise their
businesses in a more competitive environment. Globally, the volume of corporate mergers and
acquisitions grew by almost one third in 2015. The surge was fuelled mainly by domestic mergers and
acquisitions in advanced economies, who account for almost three quarters of the value of all mergers
and acquisitions.
To develop their business, corporations may also take advantage of entering and expanding in
overseas markets. While the global flow of foreign direct investments has remained fairly stable since
the financial crisis, 2015 saw an increase of about 25%. This increase was fuelled mainly by an
increased inflow to the European Union and the United States, while the People’s Republic of China
experienced a small decrease in inward foreign direct investments.
The OECD Business and Finance Outlook 2016 underlines the need to address the links between
the regulatory framework, the macroeconomic environment and business behaviour. By innovative
use of micro level data, this Scoreboard contributes to this effort and the shaping of coherent policies
that will support productivity, sustainable growth and better lives for all.
Adrian Blundell-Wignall
Special Advisor to the Secretary-General on Financial Markets
Director for Financial and Enterprise Affairs, OECD
11
Figure 1. Productivity measures for listed non-financial companies, 2002–2015
Table 1. Average value added and net sales data for listed companies, 2002–2015
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Value added per capita
United States 0.20 0.20 0.21 0.20 0.20 0.20 0.21 0.20 0.22 0.23 0.23 0.23 0.23 0.22
Europe 0.07 0.08 0.09 0.09 0.10 0.11 0.12 0.10 0.10 0.11 0.10 0.10 0.09 0.08
Japan 0.00 0.00 0.00 0.01 0.05 0.05 0.05 0.05 0.06 0.06 0.06 0.05 0.05 0.05
Australia & New Zealand 0.05 0.06 0.10 0.12 0.17 0.17 0.13 0.17 0.19 0.19 0.17 0.17 0.15 0.14
BRIICS 0.02 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.05 0.06 0.05 0.06 0.05 0.05
Other Asia 0.04 0.06 0.07 0.07 0.06 0.10 0.09 0.06 0.08 0.07 0.07 0.08 0.09 0.09
Other EMEs 0.03 0.03 0.04 0.04 0.04 0.04 0.06 0.05 0.06 0.06 0.06 0.06 0.06 0.06
Advanced Economies 0.11 0.11 0.12 0.12 0.13 0.13 0.13 0.12 0.13 0.14 0.14 0.14 0.13 0.12
Emerging Economies 0.03 0.03 0.04 0.04 0.04 0.06 0.06 0.05 0.06 0.07 0.06 0.07 0.06 0.06
Net sales per capita
United States 0.27 0.29 0.31 0.32 0.34 0.36 0.39 0.36 0.39 0.42 0.41 0.40 0.40 0.38
Europe 0.22 0.25 0.27 0.29 0.31 0.35 0.37 0.32 0.33 0.36 0.35 0.35 0.34 0.29
Japan 0.37 0.40 0.43 0.42 0.41 0.43 0.45 0.43 0.48 0.51 0.50 0.44 0.41 0.41
Australia & New Zealand 0.20 0.24 0.31 0.36 0.38 0.41 0.38 0.39 0.49 0.51 0.50 0.47 0.45 0.42
BRIICS 0.10 0.11 0.13 0.15 0.18 0.20 0.22 0.20 0.24 0.28 0.27 0.28 0.27 0.25
Other Asia 0.29 0.31 0.33 0.31 0.30 0.29 0.32 0.26 0.29 0.29 0.29 0.41 0.42 0.39
Other EMEs 0.17 0.15 0.18 0.20 0.22 0.25 0.30 0.24 0.26 0.29 0.29 0.29 0.27 0.24
Advanced Economies 0.27 0.29 0.31 0.32 0.33 0.36 0.38 0.34 0.37 0.40 0.38 0.37 0.36 0.34
Emerging Economies 0.16 0.15 0.18 0.20 0.22 0.25 0.27 0.23 0.27 0.31 0.30 0.33 0.32 0.29
Note: All data are expressed in US dollar billion per one thousand employees. Europe refers to the European Union, Norway and
Switzerland. BRIICS refers to Brazil, Russia, India, Indonesia, China and South Africa. Other Asia refers to Hong Kong (China),
Singapore, Korea and Chinese Taipei. Value added: sum of personnel expenses and EBITDA (i.e. income before interest, taxes,
depreciation and amortisation). Net sales: total operating revenues less various adjustments to gross sales.
Source: OECD calculations, Bloomberg. See Annex for details.
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
USDbln
/1000
employees
USDbln
/1000
employees
Advanced economies
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
USDbln
/1000
employees
USDbln
/1000
employees
Emergingeconomies
Value added Netsales (RHS)
Global trends in productivity
In recent years, productivity measured both as company value-added (wages plus EBITDA) per
employee and net sales per employee have declined. While net sales per employee in emerging
economies, as a result their increased participation in global value chains, has caught up with levels in
advanced economies, it has not allowed for a similar catch up with respect to productivity measured
as value added per employee.
12
Figure 2. Return on equity, cost of equity and cost of capital, 2002–2015
Source: Bloomberg, OECD calculations. See Annex for details.
0.00
0.50
1.00
1.50
2.00
2.50
3.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Ratio
Debt-to-equity ratio
Advanced economies Emerging economies
-2
0
2
4
6
8
10
12
%
Advanced economies
Dividend & Buybacks ROE - COE
ROE - COK
-10
-5
0
5
10
%
Emergingeconomies
Dividend & Buybacks ROE - COE
ROE - COK
Declining investment opportunities
In emerging economies both the return on equity (ROE) minus the cost-of-equity and the ROE minus
cost-of-capital are today negative. This is consistent with other evidence that these economies exhibit
excess capacity in important sectors resulting from overinvestment. With a decrease in investment
opportunities, dividends and buybacks have been rising in advanced economies since the 2008
financial crisis. Debt financing is still greater in advanced economies but emerging economies are
catching up.
13
Table 2. Average return on equity, cost of capital and debt data for listed companies, 2002–2015
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Debt to equity ratio
United States 3.13 2.92 2.74 2.65 2.65 2.68 2.90 2.76 2.64 2.72 2.75 2.69 2.87 2.95
Europe 3.28 3.19 3.14 3.06 3.02 3.02 3.29 3.14 2.91 2.95 3.01 2.92 3.06 3.04
Japan 3.24 3.02 2.86 2.67 2.62 2.60 2.72 2.64 2.62 2.66 2.62 2.55 2.48 2.48
Australia & New Zealand 2.29 2.19 2.41 2.33 2.28 2.45 2.29 2.05 1.97 2.09 2.12 2.05 2.11 2.13
BRIICS 1.95 1.99 1.99 1.99 2.03 2.06 2.19 2.19 2.20 2.28 2.35 2.42 2.55 2.55
Other Asia 2.41 2.29 2.25 2.26 2.27 2.29 2.44 2.33 2.19 2.24 2.33 2.60 2.55 2.60
Other EMEs 2.17 2.09 2.03 2.00 2.08 2.06 2.23 2.24 2.22 2.27 2.25 2.25 2.37 2.41
Advanced Economies 3.12 2.96 2.85 2.74 2.71 2.72 2.92 2.78 2.65 2.70 2.73 2.71 2.81 2.84
Emerging Economies 2.25 2.19 2.15 2.11 2.15 2.16 2.32 2.28 2.24 2.31 2.37 2.39 2.49 2.50
ROE minus COE (%)
United States -1.15 7.55 8.97 10.12 10.88 10.04 1.59 4.64 7.77 7.82 4.83 6.09 4.46 0.84
Europe -3.17 3.30 9.47 10.11 10.94 11.78 5.53 1.86 6.18 5.02 2.60 4.62 4.30 1.95
Japan 1.39 3.45 5.39 5.93 5.72 4.36 -4.17 -0.65 1.76 -0.24 1.34 3.63 3.42 3.40
Australia & New Zealand 0.63 5.03 12.59 13.35 14.47 9.57 -3.00 1.06 5.07 -1.21 -3.99 -1.61 -7.22 -11.65
BRIICS 3.18 7.71 8.88 9.87 6.69 4.28 -1.19 -1.72 -0.89 -1.57 -6.01 -7.54 -11.33 -12.11
Other Asia 0.16 0.13 3.38 2.42 1.29 1.83 -5.28 -3.12 0.16 -2.98 -3.88 -3.01 -4.10 -5.05
Other EMEs 0.14 4.36 5.93 7.17 6.71 8.10 0.84 0.06 2.20 1.29 0.03 -0.84 -3.31 -5.38
Advanced Economies -1.16 4.96 8.18 8.78 9.50 8.99 1.29 1.86 5.38 4.12 2.31 3.81 2.90 0.11
Emerging Economies 1.71 5.32 7.10 8.09 5.85 4.94 -0.85 -1.40 0.05 -0.86 -4.27 -5.45 -8.57 -9.60
ROE minus COK (%)
United States -0.45 8.16 9.74 10.89 11.44 11.36 5.14 7.09 10.36 11.52 9.48 10.06 9.46 6.14
Europe -1.75 4.46 10.63 11.21 11.86 12.75 8.80 4.81 9.14 8.63 6.59 7.69 8.00 5.80
Japan 2.53 4.68 7.20 7.54 7.48 6.40 -1.28 1.70 4.07 2.60 4.36 6.32 6.38 6.36
Australia & New Zealand 5.13 8.72 16.44 17.16 17.78 13.75 3.19 4.91 8.62 3.90 0.60 2.53 -2.28 -5.72
BRIICS 5.30 9.49 10.46 11.06 9.75 7.79 3.61 1.94 3.57 3.74 0.58 -0.73 -2.54 -3.82
Other Asia 3.95 4.31 7.27 6.05 4.91 6.25 1.41 1.75 5.19 3.36 2.44 3.02 3.15 2.92
Other EMEs 2.48 6.50 8.46 9.50 9.25 11.33 6.43 4.53 6.96 7.14 5.66 3.90 2.22 0.16
Advanced Economies 0.06 6.10 9.53 10.13 10.75 10.65 4.99 4.78 8.35 7.97 6.65 7.51 7.44 4.89
Emerging Economies 4.46 7.78 9.49 9.92 8.85 8.41 4.26 2.51 4.51 4.51 1.96 0.64 -1.04 -2.24
Dividend & Buybacks (% of net sales)
United States 2.66 2.61 3.60 4.66 5.23 5.82 4.28 2.88 3.65 4.53 4.52 5.07 5.82 6.06
Europe 1.84 1.56 2.85 3.58 4.27 4.07 3.84 2.64 2.71 3.18 2.86 3.32 3.26 3.33
Japan 1.09 0.75 0.79 0.94 1.17 1.53 1.70 0.64 0.85 1.17 1.22 0.99 1.41 1.41
Australia & New Zealand 2.71 4.05 5.27 5.62 7.01 5.04 3.52 1.90 5.19 4.36 4.81 3.95 4.39 4.89
BRIICS 1.76 1.95 1.22 1.70 2.13 0.82 1.08 0.97 0.87 2.21 2.37 1.99 1.44 0.93
Other Asia 2.09 2.39 2.84 2.84 3.03 2.62 3.15 1.79 1.97 2.48 1.77 1.33 1.38 1.76
Other EMEs 1.99 2.16 3.37 3.22 4.22 4.95 5.17 4.00 4.26 4.37 3.47 3.91 4.08 3.89
Advanced Economies 1.96 1.83 2.70 3.49 4.07 4.22 3.65 2.25 2.74 3.29 3.17 3.51 3.88 4.06
Emerging Economies 1.91 1.92 1.95 2.09 2.52 1.89 2.01 1.59 1.50 2.45 2.38 2.04 1.71 1.40
Note: Europe refers to the European Union, Norway and Switzerland. BRIICS refers to Brazil, Russia, India, Indonesia, China and
South Africa. Other Asia refers to Hong Kong (China), Singapore, Korea and Chinese Taipei. Dividend and buybacks ratios are
expressed in percent of net sales. Debt to capital ratio: ratio of debt to the sum of debt plus equity. ROE (return on equity): ratio of net
income to common equity. COE (cost of equity): sum of dividend and buyback yield and underlying trend in EPS growth. COK (cost
of capital): weighted average (by the share of equity and debt in total assets, respectively) sum of cost of equity and cost of debt.
Source: Bloomberg, OECD calculations. See Annex for details.
14
Figure 3. Listed non-financial company corporate finance data, 2002–2015
Source: Bloomberg, OECD calculations. See Annex for details.
0
2
4
6
8
10
12
14
0
1
2
3
4
5
6
7
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% of net sales% of net sales
Advanced economies
Free cashflow R&D expenditure M&A deal value Capital expenditure (RHS)
0
2
4
6
8
10
12
14
0
1
2
3
4
5
6
7
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% of net sales
% of net sales
Emergingeconomies
Greater capital expenditure in emerging economies
Companies in emerging economies invest much more as a percentage of net sales than companies in
advanced economies. However, advanced economies are benefitting from efficacy of three corporate
strategies that boost their productivity: higher research and development; higher free cash flow, and;
more mergers and acquisition activities to rationalise business models.
15
Table 3. Key financial data for non-financial listed companies, 2002–2015
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Capital expenditure
United States 6.13 5.29 5.48 5.68 6.43 6.63 6.70 5.79 5.87 6.39 7.06 6.98 7.39 7.20
Europe 6.86 6.09 6.34 6.52 6.82 6.97 7.13 6.96 6.37 6.38 6.44 6.43 6.36 6.54
Japan 5.68 5.29 5.53 5.84 5.56 5.65 5.92 4.97 4.58 4.86 5.30 5.06 5.00 5.00
Australia & New Zealand 10.04 8.75 9.58 10.70 11.06 10.58 12.36 11.21 10.20 13.86 14.72 12.06 10.56 10.88
BRIICS 11.87 11.87 11.37 11.55 12.10 13.36 13.69 13.22 11.97 11.48 11.12 10.52 9.58 9.84
Other Asia 8.19 8.69 9.58 9.23 9.16 8.55 8.08 8.27 8.23 7.87 7.48 7.35 7.16 7.93
Other EMEs 9.98 9.11 8.25 10.13 10.55 10.97 10.98 10.95 9.15 8.76 9.24 9.95 10.48 11.28
Advanced Economies 6.51 5.81 6.11 6.36 6.73 6.93 7.09 6.47 6.22 6.59 7.02 6.89 6.99 6.91
Emerging Economies 9.83 10.20 9.78 10.54 11.12 11.90 12.16 11.91 10.80 10.43 10.22 9.77 9.18 9.61
Free cash flow
United States 5.53 6.39 6.51 6.04 5.31 5.41 4.58 6.62 6.32 6.12 5.40 5.90 5.38 6.15
Europe 3.47 4.70 6.10 5.60 5.24 5.08 3.48 5.89 5.32 3.90 3.90 3.79 4.08 4.48
Japan 3.09 4.09 3.18 2.38 2.71 2.43 0.62 4.73 4.28 1.99 2.14 3.24 3.43 3.43
Australia & New Zealand 6.24 7.57 7.30 6.72 8.09 6.74 6.55 5.79 4.61 3.80 4.63 5.65 6.28 5.71
BRIICS 4.02 4.49 3.08 2.78 2.56 0.75 -0.87 0.92 0.27 -1.18 -0.40 0.42 1.61 2.19
Other Asia 6.24 6.27 5.60 4.23 4.06 4.25 2.38 3.26 3.42 1.76 2.47 2.45 2.54 3.83
Other EMEs 4.97 7.97 8.56 6.94 7.14 6.62 4.18 7.34 6.97 5.14 5.19 4.58 4.75 4.27
Advanced Economies 4.25 5.29 5.57 5.11 4.81 4.69 3.47 5.81 5.37 4.26 4.02 4.45 4.41 4.94
Emerging Economies 4.69 5.42 5.03 3.77 3.60 2.46 0.30 2.36 1.79 0.20 0.89 1.25 2.06 2.65
R&D expenditure
United States 2.22 2.18 2.02 1.94 2.03 1.97 1.91 2.06 2.02 2.07 2.12 2.16 2.26 2.54
Europe 2.06 2.03 2.12 1.97 2.08 2.05 1.79 1.97 1.88 1.81 1.86 1.87 2.02 2.16
Japan 2.63 2.61 2.58 2.56 2.45 2.43 2.63 2.60 2.50 2.48 2.44 2.22 2.28 2.28
Australia & New Zealand 0.24 0.21 0.21 0.21 0.26 0.29 0.31 0.25 0.23 0.22 0.24 0.26 0.25 0.27
BRIICS 0.28 0.27 0.26 0.27 0.30 0.31 0.35 0.43 0.48 0.56 0.63 0.72 0.87 1.00
Other Asia 1.27 1.67 1.80 1.85 1.87 1.97 1.86 1.82 1.83 2.01 2.11 1.71 1.73 1.81
Other EMEs 0.26 0.30 0.26 0.22 0.16 0.15 0.16 0.20 0.18 0.18 0.22 0.22 0.23 0.27
Advanced Economies 2.20 2.16 2.11 2.01 2.04 1.99 1.91 2.03 1.96 1.94 1.97 1.93 2.04 2.21
Emerging Economies 0.56 0.67 0.68 0.64 0.62 0.65 0.59 0.62 0.66 0.74 0.82 0.88 0.99 1.09
M&A deal value
United States 4.00 2.75 2.48 3.64 6.60 4.84 3.36 3.57 2.70 2.82 3.02 2.01 4.03 5.25
Europe 2.49 1.50 1.58 2.60 3.66 4.92 3.05 2.40 2.00 2.28 1.29 1.19 2.06 2.87
Japan 0.84 0.33 0.75 0.81 1.99 1.10 1.62 0.95 1.01 1.21 1.11 1.64 0.92 0.94
Australia & New Zealand 2.74 2.66 3.02 2.94 3.10 6.10 2.26 0.57 4.42 5.46 1.53 1.06 2.11 2.25
BRIICS 0.90 1.48 1.86 1.74 1.63 2.77 1.52 1.68 1.63 1.10 0.74 1.16 0.99 2.66
Other Asia 1.20 0.89 1.06 1.06 1.64 3.00 0.86 0.97 1.81 1.00 1.01 0.69 1.70 2.04
Other EMEs 0.94 0.72 0.95 0.91 1.54 3.31 1.93 1.28 3.26 1.90 1.69 1.29 1.16 0.89
Advanced Economies 2.72 1.72 1.83 2.65 4.59 4.15 2.86 2.58 2.17 2.33 1.96 1.65 2.80 3.38
Emerging Economies 0.87 1.22 1.45 1.32 1.49 2.87 1.51 1.52 1.93 1.22 0.99 1.07 1.02 2.43
Note: All data are expressed in percent of net sales. Europe refers to the European Union, Norway and Switzerland. BRIICS refers to
Brazil, Russia, India, Indonesia, China and South Africa. Other Asia refers to Hong Kong (China), Singapore, Korea and Chinese
Taipei. Capital expenditure: amount the company spent on purchases of tangible fixed assets. Free cash flow: operating cash flow
minus capital expenditures. R&D expenditure: operating expense related to the research and development of a company's products
or services. M&A deal value: declared amount effectively paid by the acquirer for the target.
Source: Bloomberg, OECD calculations. See Annex for details.
16
Figure 4. Outstanding stock of non-financial corporate bonds, 2000–2015
Table 4. Outstanding stock of corporate bonds, 2000–2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
World 7.7 8.5 8.9 9.7 10.6 11.4 12.9 14.3 14.9 15.8 16.7 17.5 18.8 19.9 20.9 21.8
Non-financial 3.5 4.0 4.3 4.5 4.7 4.8 5.1 5.5 5.8 6.8 7.5 8.1 9.0 9.9 10.4 11.0
Financial 4.2 4.4 4.6 5.2 5.9 6.6 7.8 8.8 9.1 9.0 9.2 9.4 9.8 10.0 10.5 10.7
Investment grade 7.0 7.7 8.0 8.8 9.6 10.3 11.7 13.0 13.7 14.5 15.1 15.8 16.8 17.6 18.4 19.1
Non-investment grade 0.8 0.8 0.8 0.9 1.0 1.1 1.2 1.3 1.2 1.3 1.6 1.7 2.0 2.3 2.6 2.7
Advanced economies 7.4 8.1 8.5 9.3 10.1 10.9 12.2 13.5 13.9 14.5 15.1 15.5 16.4 17.0 17.8 18.5
Non-financial 3.4 3.9 4.1 4.3 4.5 4.5 4.8 5.1 5.3 6.1 6.6 6.9 7.7 8.3 8.8 9.3
Financial 4.0 4.3 4.5 5.0 5.7 6.4 7.4 8.4 8.6 8.4 8.5 8.6 8.7 8.7 9.0 9.2
Investment grade 6.7 7.4 7.8 8.5 9.2 9.9 11.1 12.3 12.9 13.3 13.7 14.0 14.6 15.0 15.6 16.1
Non-investment grade 0.7 0.7 0.7 0.8 0.9 1.0 1.1 1.1 1.1 1.2 1.4 1.5 1.7 2.0 2.2 2.3
Emerging markets 0.3 0.3 0.3 0.4 0.4 0.5 0.7 0.9 1.0 1.3 1.6 2.0 2.4 2.9 3.1 3.3
Non-financial 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.4 0.5 0.7 0.9 1.1 1.3 1.6 1.6 1.7
Financial 0.2 0.2 0.2 0.2 0.2 0.2 0.4 0.5 0.5 0.6 0.7 0.9 1.1 1.3 1.5 1.6
Investment grade 0.2 0.2 0.3 0.3 0.3 0.4 0.6 0.7 0.8 1.1 1.4 1.8 2.2 2.6 2.7 2.9
Non-investment grade 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.4 0.4
United States 3.3 3.7 3.9 4.1 4.4 4.5 5.0 5.5 5.5 5.5 5.7 5.7 6.0 6.4 6.8 7.4
Non-financial 2.0 2.2 2.4 2.5 2.6 2.6 2.7 2.9 2.9 3.2 3.4 3.6 3.9 4.2 4.6 5.1
Financial 1.3 1.4 1.5 1.6 1.8 1.9 2.2 2.6 2.6 2.4 2.3 2.2 2.1 2.2 2.3 2.4
Investment grade 2.7 3.1 3.3 3.4 3.6 3.7 4.1 4.6 4.7 4.7 4.6 4.6 4.7 5.0 5.4 5.9
Non-investment grade 0.6 0.6 0.6 0.7 0.8 0.8 0.9 0.9 0.8 0.9 1.0 1.1 1.3 1.4 1.5 1.5
Europe 3.0 3.2 3.4 3.8 4.3 4.8 5.6 6.2 6.4 6.8 7.0 7.2 7.5 7.5 7.7 7.7
Non-financial 0.7 0.8 0.9 1.0 1.1 1.1 1.3 1.4 1.5 1.9 2.1 2.2 2.4 2.6 2.7 2.8
Financial 2.3 2.4 2.5 2.8 3.2 3.7 4.3 4.8 4.9 4.9 4.9 5.0 5.0 4.9 5.0 4.9
Investment grade 2.9 3.2 3.3 3.7 4.2 4.7 5.4 6.0 6.3 6.6 6.7 6.9 7.1 7.0 7.1 7.1
Non-investment grade 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.4 0.6 0.6
OECD 7.4 8.1 8.5 9.3 10.1 10.9 12.2 13.4 13.9 14.5 15.0 15.5 16.3 17.0 17.8 18.4
Non-financial 3.4 3.8 4.1 4.3 4.5 4.5 4.8 5.1 5.3 6.1 6.6 7.0 7.7 8.3 8.8 9.4
Financial 4.0 4.3 4.5 5.0 5.6 6.3 7.4 8.3 8.6 8.4 8.4 8.5 8.6 8.6 8.9 9.0
Investment grade 6.7 7.4 7.8 8.5 9.2 9.9 11.1 12.3 12.8 13.3 13.6 14.0 14.6 15.0 15.6 16.1
Non-investment grade 0.7 0.7 0.8 0.8 0.9 1.0 1.1 1.1 1.1 1.2 1.4 1.5 1.7 2.0 2.2 2.4
Note: All data are expressed in US dollar trillion.
Source: Thomson Reuters, Bloomberg, OECD calculations. See Annex for details.
A global surge in corporate bond issues
Since 2008, corporate bonds have become an increasingly important source of financing also for non-
financial companies. Two main factors seem to have contributed to this development: first the
decrease in bank lending to non-financial companies (so-called deleveraging), and; second, the
historically low levels of bond interest rates. From being a negligible source of external finance a
decade ago, the outstanding stock of corporate bonds has reached significant levels also in emerging
economies.
17
Figure 5. Average maturities for corporate bonds issued by non-financial companies, 2000–2015
Table 5. Average maturities for corporate bonds, 2000–2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
World 4.9 5.6 5.8 5.8 6.0 6.5 6.8 6.8 6.2 6.5 6.8 6.7 7.2 7.3 6.9 6.9
Non-financial 6.8 7.3 7.4 8.2 7.9 9.1 9.5 9.7 7.8 7.5 7.9 7.9 8.8 8.0 8.3 8.6
Financial 4.2 4.7 5.1 4.7 5.2 5.5 5.8 5.7 5.3 5.5 6.1 5.9 5.9 6.6 5.9 5.8
Investment grade 4.9 5.5 5.7 5.6 5.9 6.4 6.7 6.7 6.1 6.4 6.7 6.6 7.2 7.3 6.9 6.9
Non-investment grade 7.8 8.0 8.2 8.1 8.2 8.3 8.4 8.7 7.4 7.3 7.8 7.5 7.6 7.6 7.3 7.7
Advanced economies 4.9 5.5 5.8 5.8 6.1 6.6 6.9 7.0 6.1 6.5 6.9 7.0 7.7 8.1 7.4 8.0
Non-financial 6.9 7.2 7.5 8.4 8.0 9.2 9.7 10.1 8.0 7.9 8.4 8.4 9.3 9.1 8.9 10.0
Financial 4.2 4.6 5.1 4.7 5.2 5.6 5.8 5.9 5.1 5.2 6.0 6.1 6.3 7.1 6.2 6.5
Investment grade 4.9 5.5 5.7 5.7 5.9 6.5 6.8 6.9 6.1 6.4 6.8 7.0 7.8 8.2 7.4 8.0
Non-investment grade 8.4 8.3 8.6 8.4 8.4 8.6 9.0 9.2 7.7 7.3 7.9 7.6 7.6 7.7 7.5 7.8
Emerging markets 4.9 6.3 5.7 5.5 5.8 5.8 6.2 5.9 6.5 6.4 6.5 5.4 5.7 5.3 5.2 4.3
Non-financial 5.4 7.6 6.3 6.7 7.3 8.6 8.1 8.2 6.7 6.1 6.1 6.0 6.9 5.4 5.8 4.8
Financial 4.6 5.6 5.3 4.8 5.0 4.6 5.5 4.9 6.3 6.7 6.8 5.1 5.1 5.1 4.8 3.9
Investment grade 4.9 6.4 5.7 5.4 5.7 5.7 6.2 5.8 6.5 6.3 6.4 5.4 5.6 5.2 5.2 4.2
Non-investment grade 5.0 4.5 5.7 6.0 6.0 7.0 6.3 7.1 6.1 7.6 7.1 7.0 7.6 6.9 6.2 6.8
United States 4.8 6.3 7.2 7.5 7.4 8.3 8.4 9.5 8.8 9.3 9.6 10.2 10.8 10.8 10.6 11.1
Non-financial 8.1 9.2 9.8 9.9 9.4 11.3 11.7 12.4 10.9 9.9 10.8 11.5 11.8 11.8 12.1 12.4
Financial 3.8 4.9 5.9 5.9 6.0 6.2 6.5 7.7 6.5 7.7 7.9 8.3 8.3 9.0 7.8 8.6
Investment grade 4.7 6.2 7.0 7.4 7.1 8.2 8.3 9.5 8.9 9.9 10.3 11.0 12.0 11.9 11.6 11.8
Non-investment grade 8.7 8.3 8.7 8.5 8.5 8.7 9.4 9.7 8.1 7.4 8.0 7.7 8.0 8.0 7.6 8.0
Europe 5.1 5.0 5.3 5.0 5.3 6.0 6.4 6.2 5.8 6.0 6.7 6.5 6.8 7.1 6.9 7.3
Non-financial 6.4 7.0 6.8 8.3 7.5 8.3 10.1 10.6 8.0 8.0 8.4 7.7 8.7 7.9 8.1 8.1
Financial 4.8 4.4 4.9 4.3 4.9 5.6 5.7 5.5 5.3 5.0 6.2 6.2 6.0 6.7 6.4 7.0
Investment grade 5.0 5.0 5.3 4.9 5.2 6.0 6.4 6.2 5.8 6.0 6.6 6.5 6.8 7.0 6.9 7.2
Non-investment grade 8.2 8.4 8.1 7.6 8.1 7.8 8.3 7.8 5.5 6.7 6.9 6.8 6.5 7.5 7.5 7.8
OECD 4.9 5.6 5.9 5.9 6.2 6.8 7.1 7.2 6.3 6.6 6.9 7.2 7.9 8.3 7.5 8.1
Non-financial 7.1 7.4 7.7 8.7 8.4 9.6 10.3 10.4 8.6 8.1 8.8 8.8 9.7 9.5 9.3 10.1
Financial 4.2 4.7 5.1 4.7 5.3 5.6 5.9 6.0 5.2 5.2 5.9 6.2 6.3 7.1 6.2 6.6
Investment grade 4.9 5.5 5.8 5.8 6.0 6.6 7.0 7.1 6.3 6.5 6.8 7.1 7.9 8.3 7.5 8.1
Non-investment grade 8.2 8.2 8.6 8.4 8.4 8.7 9.1 9.4 7.7 7.3 7.9 7.6 7.7 7.8 7.5 7.9
Note: Average maturities are expressed in number of years.
Source: Thomson Reuters, OECD calculations. See Annex for details.
The maturity divergence
The average maturities for investment grade bonds issued by non-financial companies in the United
States have always been longer than for bonds issued by companies in the rest of the world. However,
the total difference in average maturity has increased quite considerably since the financial crisis.
18
Figure 6. Initial public offerings (IPOs), 2000–2015
Table 6. Initial public offerings, 2000–2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
World 283 122 84 67 156 183 277 324 105 119 291 155 104 139 227 172
Non-financial 263 96 61 45 130 149 206 251 74 99 205 140 94 113 186 129
Financial 20 26 24 22 26 34 71 73 31 21 86 16 10 26 41 43
Advanced economies 244 109 63 44 122 120 149 146 46 37 130 73 59 93 142 115
Non-financial 225 83 43 31 101 105 125 127 22 31 82 64 55 80 113 89
Financial 19 26 20 12 20 15 24 19 24 6 48 9 4 12 29 26
Emerging markets 39 13 22 23 34 63 128 178 59 82 161 82 44 47 85 58
Non-financial 38 13 18 14 28 44 81 124 52 68 122 75 39 32 73 40
Financial 1 0 4 10 6 19 48 54 8 15 38 7 6 14 12 17
United States 81 48 27 13 43 37 38 35 29 17 37 28 35 47 46 24
Non-financial 74 38 15 10 33 31 32 33 7 15 33 26 33 43 31 20
Financial 7 10 12 3 11 6 6 2 22 2 4 2 2 4 16 4
Europe 119 43 20 9 40 57 74 78 10 5 25 29 10 25 58 61
Non-financial 112 29 19 6 36 51 62 69 9 2 22 23 7 19 45 47
Financial 7 14 1 3 4 6 12 10 1 2 2 6 2 6 12 14
OECD 231 106 56 40 118 122 145 141 49 33 107 70 61 94 140 113
Non-financial 213 81 40 28 96 106 121 119 25 27 79 62 55 83 111 87
Financial 18 26 16 12 23 16 23 22 24 5 29 8 5 11 29 26
Note: All data are expressed in 2015 US dollar billion.
Source: Thomson Reuters, OECD calculations. See Annex for details.
An increase in emerging market use of public equity markets
Companies tap public equity markets for funding for the first time by making an initial public offering
(IPO). During the early 2000s, global IPO activity was dominated by companies from advanced
economies. However, in the last ten years, companies from emerging markets account for almost half
of the money raised through IPOs.
19
Figure 7. Small non-financial company IPOs in advanced economies, 1994–2015
Table 7. Small non-financial company IPOs in advanced and emerging economies
Global Advanced economies Emerging economies
2000-2007 2008-2015 2000-2007 2008-2015 2000-2007 2008-2015
Total value of IPOs with size
less than USD 100 M (2015
USD, million)
173,827 142,279 123,569 62,083 50,258 80,167
Share of all IPOs 14.5% 13.7% 10.3% 6.0% 4.2% 7.7%
Number of IPOs with size less
than USD 100 M (%)
7,765 4,926 5,881 2,699 1,884 2,227
Share of all IPOs 78.1% 70.8% 59.1% 38.8% 18.9% 32.0%
Source: Thomson Reuters, OECD calculations. See Annex for details.
A decline in initial public offerings by small companies
The last decade has seen a fairly marked decline in the extent to which small and medium-sized
growth companies access public equity markets for external funding. This trend is particularly marked
in the United States and in Europe. Today, companies in advanced economies that actually use public
equity markets for the first time tend to be larger at the time of the IPO.
20
Figure 8. Secondary public offerings in advanced and emerging economies, 2000–2015
Table 8. Secondary public offerings, 2000–2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
World 457 293 265 311 391 422 460 593 648 946 733 505 517 575 606 692
Non-financial 397 239 210 227 320 307 325 440 293 476 463 317 323 437 468 517
Financial 60 54 54 84 71 115 135 154 355 469 270 189 194 137 138 175
Advanced economies 430 276 241 291 355 353 382 415 520 790 422 323 347 408 422 461
Non-financial 374 225 198 214 291 263 276 329 200 381 246 212 222 318 316 348
Financial 56 51 43 77 64 91 106 85 320 409 176 110 124 90 105 113
Emerging markets 27 18 23 20 36 69 79 178 128 155 311 183 170 167 184 232
Non-financial 23 14 12 13 29 44 49 110 93 95 218 104 100 120 151 170
Financial 4 4 11 7 7 24 29 68 35 60 94 79 70 47 33 62
United States 147 88 76 78 94 86 94 88 167 220 149 90 135 133 117 146
Non-financial 138 79 68 67 86 69 79 79 57 74 56 61 72 125 105 126
Financial 10 9 8 11 7 18 15 10 109 146 93 29 64 8 13 20
Europe 180 119 100 125 157 158 159 179 246 348 128 123 102 167 182 156
Non-financial 141 98 71 84 122 109 93 123 70 156 78 64 67 99 111 104
Financial 38 21 29 42 36 49 65 57 176 192 50 58 35 68 71 52
OECD 410 270 239 273 344 336 359 370 511 760 402 314 321 408 393 408
Non-financial 397 239 210 227 320 307 325 440 293 476 463 317 323 437 468 517
Financial 60 54 54 84 71 115 135 154 355 469 270 189 194 137 138 175
Note: All data are expressed in 2015 US dollar billion.
Source: Thomson Reuters, OECD calculations. See Annex for details.
Public equity markets remain an important source of continuous financing
The role of public equity markets in providing a company with new equity capital is not limited to the
time of the initial public offering (IPO). They also provide an opportunity for companies that are
already listed to raise additional capital through a secondary public offering (SPO) or “follow-on
issue”. In fact, every year since 2000, the global amount of money raised through SPOs exceeded the
amount of money raised through IPOs. Record SPO levels were reached in the two years following
the 2008 financial crisis.
21
Figure 9. Corporate bond issuance by companies in energy, industrials and materials sectors,
2000–2015
Table 9. Distribution of corporate bond issuance among different sectors, 2000–2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Consumer Products and Services
Volume 20 45 21 31 53 46 61 39 40 58 58 63 88 73 80 77
Share 1% 2% 1% 1% 2% 2% 2% 1% 1% 2% 2% 2% 2% 2% 2% 2%
Consumer Staples
Volume 57 70 69 71 38 41 45 71 94 113 88 84 125 132 92 117
Share 3% 3% 3% 3% 1% 1% 1% 2% 3% 4% 3% 3% 3% 4% 3% 4%
Energy
Volume 156 220 208 232 164 153 209 292 303 528 369 365 482 464 424 368
Share 8% 9% 10% 8% 6% 5% 6% 8% 11% 17% 12% 12% 13% 13% 12% 11%
Financials
Volume 1,346 1,308 1,286 1,881 2,130 2,165 2,699 2,574 1,927 1,539 1,829 1,744 1,867 1,678 1,987 1,753
Share 65% 55% 64% 68% 75% 76% 74% 72% 68% 48% 58% 56% 52% 48% 55% 52%
Healthcare
Volume 6 44 15 37 36 31 42 79 36 124 76 89 106 88 144 188
Share 0% 2% 1% 1% 1% 1% 1% 2% 1% 4% 2% 3% 3% 3% 4% 6%
High Technology
Volume 32 46 30 22 20 28 53 46 53 65 69 80 76 111 103 155
Share 2% 2% 1% 1% 1% 1% 1% 1% 2% 2% 2% 3% 2% 3% 3% 5%
Industrials
Volume 126 170 102 154 128 112 140 135 104 247 224 221 259 310 234 225
Share 6% 7% 5% 6% 4% 4% 4% 4% 4% 8% 7% 7% 7% 9% 6% 7%
Materials
Volume 53 75 78 95 72 63 95 86 84 173 161 160 219 173 134 115
Share 3% 3% 4% 3% 3% 2% 3% 2% 3% 5% 5% 5% 6% 5% 4% 3%
Media and Entertainment
Volume 46 66 46 72 57 48 74 50 35 85 86 65 105 83 92 87
Share 2% 3% 2% 3% 2% 2% 2% 1% 1% 3% 3% 2% 3% 2% 3% 3%
Real Estate
Volume 18 30 27 32 42 40 65 53 24 41 58 55 80 109 108 91
Share 1% 1% 1% 1% 1% 1% 2% 1% 1% 1% 2% 2% 2% 3% 3% 3%
Retail
Volume 32 56 35 39 36 34 41 67 46 55 57 61 74 84 81 73
Share 2% 2% 2% 1% 1% 1% 1% 2% 2% 2% 2% 2% 2% 2% 2% 2%
Telecommunications
Volume 181 229 85 82 82 80 116 89 92 149 99 112 123 200 138 94
Share 9% 10% 4% 3% 3% 3% 3% 2% 3% 5% 3% 4% 3% 6% 4% 3%
Note: All data are expressed in 2015 US dollar billion.
Source: Thomson Reuters, OECD calculations. See Annex for details.
New industrial sectors using corporate bonds
The single most important sector with respect to the use of corporate bonds is the financial services
sector. However, the relative importance of the financial services sector has declined by one fifth
during the post-crisis period and was mainly replaced by the energy, industrials and materials sectors.
This shift was also the result of a large absolute increase in the amount of money raised by these
supercycle sectors.
22
Figure 10. Distribution of public equity financing among different sectors, 2000–2015
Table 10. Distribution of public equity financing among different sectors, 2000–2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Consumer Products and Services
Volume 32 17 14 11 19 22 33 29 7 17 22 23 15 34 42 43
Share 4% 4% 4% 3% 3% 4% 5% 3% 1% 2% 2% 3% 2% 5% 5% 5%
Consumer Staples
Volume 15 21 13 9 23 22 28 36 47 38 41 29 27 41 34 28
Share 2% 5% 4% 2% 4% 4% 4% 4% 6% 4% 4% 4% 4% 6% 4% 3%
Energy
Volume 54 46 43 45 87 93 93 124 70 100 196 92 80 86 97 80
Share 7% 11% 12% 12% 16% 15% 13% 14% 9% 9% 19% 14% 13% 12% 12% 9%
Financials
Volume 80 80 78 106 97 149 206 227 386 490 356 205 205 164 179 218
Share 11% 19% 22% 28% 18% 25% 28% 25% 51% 46% 35% 31% 33% 23% 22% 25%
Healthcare
Volume 50 31 18 16 28 30 29 42 15 26 28 30 26 41 59 86
Share 7% 8% 5% 4% 5% 5% 4% 5% 2% 2% 3% 5% 4% 6% 7% 10%
High Technology
Volume 205 50 34 42 60 61 58 66 16 52 54 48 50 64 99 81
Share 28% 12% 10% 11% 11% 10% 8% 7% 2% 5% 5% 7% 8% 9% 12% 9%
Industrials
Volume 45 37 39 37 68 70 80 125 73 95 138 64 78 98 108 104
Share 6% 9% 11% 10% 12% 12% 11% 14% 10% 9% 13% 10% 13% 14% 13% 12%
Materials
Volume 15 20 26 30 42 45 78 124 81 132 107 104 57 61 67 72
Share 2% 5% 7% 8% 8% 7% 11% 14% 11% 12% 10% 16% 9% 9% 8% 8%
Media and Entertainment
Volume 41 20 25 14 31 27 30 28 9 27 17 17 19 37 43 38
Share 6% 5% 7% 4% 6% 4% 4% 3% 1% 3% 2% 3% 3% 5% 5% 4%
Real Estate
Volume 4 5 3 5 13 18 38 64 16 49 22 13 15 29 38 37
Share 1% 1% 1% 1% 2% 3% 5% 7% 2% 5% 2% 2% 2% 4% 5% 4%
Retail
Volume 16 18 17 16 21 12 28 21 11 22 21 27 27 34 41 39
Share 2% 4% 5% 4% 4% 2% 4% 2% 1% 2% 2% 4% 4% 5% 5% 5%
Telecommunications
Volume 182 71 40 46 58 56 36 32 22 16 21 8 22 22 27 35
Share 25% 17% 11% 12% 11% 9% 5% 3% 3% 2% 2% 1% 3% 3% 3% 4%
Note: All data are expressed in 2015 US dollar billion.
Source: Thomson Reuters, OECD calculations. See Annex for details.
Sectoral trends in the use of public equity markets
At the time of the financial crisis, companies in the financial services sector significantly increased their
use of public equity markets for external financing. This strengthening of financial companies’ balance
sheets was mainly done through secondary public offerings (SPO). The use of public equity markets by
the telecommunications industry before the crisis has declined to very low levels.
23
Figure 11. Rating quality and new supply of corporate bonds, 2000–2015
Table 11. Distribution of corporate bond issuance among rating categories,
as a percentage of total, 2000–2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
A-grade investment 86% 78% 80% 78% 80% 83% 81% 82% 88% 71% 65% 67% 58% 53% 55% 58%
B-grade investment 9% 16% 14% 13% 11% 10% 11% 10% 10% 19% 18% 17% 25% 27% 26% 27%
B-grade non-investment 4% 6% 5% 8% 8% 6% 7% 7% 3% 10% 16% 14% 16% 18% 18% 14%
C-grade non-investment 0% 0% 0% 0% 1% 1% 1% 1% 0% 0% 1% 1% 1% 2% 1% 1%
Note: There are eleven non-investment grade categories: five from C, C to CCC+; and six from B, B- to BB+. There are ten investment
grade categories: three from B, BBB- to BBB+; and seven from A, A- to AAA. The index is weighted as one for C, two for CC and rising
to twenty one for AAA. A fall in the index indicates declining quality.
Source: Thomson Reuters, Bloomberg, OECD calculations. See Annex for details.
A decline in overall corporate bond ratings
Since the financial crisis, corporate bond markets have experienced a significant decrease in overall
corporate bond rating quality. This is the result of an increased share of non-investment grade bonds
and B-grade bonds being issued. As a consequence, the weighted bond rating index, which is
constructed by assigning the value 1 to the lowest credit quality rating and 21 to the highest credit
quality rating, shows an almost 20% decline in rating quality since 2008.
24
Figure 12. Covenant protection index for corporate bonds issued in the United States,
2000–2014
Note: The 34 covenant variables in the dataset are matched to the 15 covenant types. If a bond had at least one covenant that
belongs to a certain covenant type, it was considered to have that covenant type. For each covenant type, a binary variable
was generated, which is equal to 1 if the covenant type is available in the bond indenture. The binary variables are then
summed, divided by 15 to create an index that ranges from 0 to 1, with the ratio 1 (0) denoting the highest (lowest) possible
protection for bondholders. Data from the binary variables frequency in selected sub-categories are shown in Table 12
below.
Source: OECD, “Corporate Bonds, Bondholders and Corporate Governance”, OECD Corporate Governance Working
Papers, No. 16, updated with 2014 data.
The decline in corporate bond covenant protection
The increase in non-investment grade bond issues has been accompanied by a shift in the
characteristics of corporate bond indentures, which is the contract containing the main features of the
bond, including any restrictive conditions (the covenants). The covenant protection index, which
tracks the frequency of different covenants used in the United States, has declined significantly for
non-investment grade bonds since 2005. While a minor improvement can be noted in the last couple
of years, the overall decline and the accompanying decline in rating quality, suggest that bond
investors in their search for yield have been willing to trade governance rights and protection for
higher expected returns.
25
Table 12. Frequency of different types of corporate bond covenants, 2000–2014
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of observations
Non-IG 282 287 253 348 460 385 313 345 164 250 470 466 491 448 354
IG 664 753 597 638 456 479 490 607 530 687 582 712 823 848 864
Restrictionson
Payouts
Dividend Payment Restrictions
Non-IG 76% 82% 86% 78% 82% 84% 65% 58% 59% 45% 50% 54% 34% 41% 42%
IG 2% 3% 1% 3% 6% 6% 1% 2% 1% 2% 2% 1% 1% 1% 0%
Share Repurchase Restrictions
Non-IG 88% 88% 91% 86% 84% 86% 67% 61% 57% 49% 53% 63% 43% 54% 46%
IG 6% 4% 4% 3% 2% 1% 0% 1% 1% 1% 2% 1% 0% 0% 1%
RestrictionsonFinancingActivities
Funded Debt Restrictions
Non-IG 0% 0% 0% 0% 0% 0% 0% 1% 1% 0% 0% 0% 0% 0% 0%
IG 2% 1% 1% 1% 1% 1% 0% 2% 1% 0% 0% 1% 1% 1% 0%
Subordinated Debt Restrictions
Non-IG 11% 28% 36% 7% 0% 1% 2% 2% 1% 0% 0% 0% 0% 0% 0%
IG 0% 0% 0% 0% 0% 1% 1% 0% 1% 1% 0% 1% 2% 0% 1%
Senior Debt Restrictions
Non-IG 2% 1% 0% 2% 0% 0% 0% 1% 0% 0% 0% 0% 0% 0% 0%
IG 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Secured Debt Restrictions
Non-IG 78% 71% 74% 76% 72% 88% 78% 66% 68% 54% 53% 57% 45% 62% 57%
IG 60% 74% 67% 66% 55% 61% 60% 60% 69% 57% 50% 51% 54% 52% 53%
Leverage Restrictions
Non-IG 91% 91% 93% 89% 89% 88% 72% 64% 61% 54% 56% 65% 48% 60% 57%
IG 14% 13% 12% 12% 15% 17% 15% 12% 8% 6% 11% 11% 11% 10% 17%
Sale & Lease Back
Non-IG 49% 41% 45% 49% 43% 44% 47% 27% 18% 29% 29% 23% 22% 26% 30%
IG 30% 36% 35% 37% 28% 31% 35% 41% 48% 44% 41% 43% 46% 43% 40%
Stock Issue Restrictions
Non-IG 62% 67% 66% 63% 70% 70% 52% 49% 48% 31% 31% 40% 23% 28% 26%
IG 4% 4% 6% 8% 12% 10% 7% 5% 3% 1% 2% 0% 0% 0% 1%
Event-drivenCovenants
Rating & NW Triggers
Non-IG 1% 5% 5% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
IG 1% 2% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1%
Cross Default Provisions
Non-IG 94% 96% 95% 75% 92% 90% 73% 70% 74% 64% 67% 73% 63% 75% 74%
IG 49% 48% 40% 38% 52% 64% 59% 59% 58% 49% 74% 89% 89% 94% 89%
Poison Put
Non-IG 92% 89% 93% 86% 88% 88% 81% 92% 82% 89% 90% 91% 91% 89% 86%
IG 5% 5% 2% 2% 2% 3% 8% 39% 39% 42% 45% 38% 42% 35% 43%
RestrictionsonInvestment
ActivitiesandAssetSales
Asset Sale Restrictions
Non-IG 95% 99% 98% 99% 98% 98% 92% 78% 75% 67% 67% 77% 65% 75% 75%
IG 87% 92% 96% 93% 88% 90% 87% 83% 84% 59% 68% 81% 87% 89% 89%
Investment Policy Restrictions
Non-IG 9% 7% 4% 2% 2% 2% 5% 1% 4% 21% 10% 0% 1% 1% 2%
IG 2% 2% 1% 1% 0% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Merger Restrictions
Non-IG 92% 98% 97% 97% 97% 97% 92% 78% 75% 66% 67% 75% 63% 75% 75%
IG 86% 91% 95% 93% 88% 89% 88% 83% 84% 59% 66% 81% 87% 89% 88%
Source: OECD, “Corporate Bonds, Bondholders and Corporate Governance”, OECD Corporate Governance Working Papers, No. 16, updated
with 2014 data.
26
Figure 13. Distance-to-default (DTD) of large listed banks, 1999–2016
Table 13. Average distance-to-default (DTD) of large listed banks, 2003–2016
All Large Banks G-SIBs Other Large Banks
United
States
Europe Asia
Latin
America
United
States
Europe Asia
United
States
Europe Asia
Latin
America
Jun-03 2.79 2.27 1.82 1.82 2.65 2.27 1.31 3.37 2.26 2.68 1.82
Dec-03 4.49 3.50 1.94 2.80 4.32 3.52 1.21 5.25 3.42 3.08 2.80
Jun-04 5.81 4.65 1.96 2.84 5.69 4.75 1.47 6.38 4.26 2.56 2.84
Dec-04 6.74 5.25 2.55 3.00 6.75 5.33 2.27 6.65 4.92 2.88 3.00
Jun-05 7.05 6.20 3.32 3.40 7.08 6.32 3.37 6.94 5.62 3.27 3.40
Dec-05 7.50 6.23 3.29 3.10 7.62 6.38 3.22 6.93 5.43 3.36 3.10
Jun-06 7.46 5.51 3.09 2.54 7.54 5.63 2.87 7.08 4.91 3.33 2.54
Dec-06 7.23 4.97 3.52 2.62 7.11 5.10 3.24 7.86 4.35 3.80 2.62
Jun-07 6.90 5.41 3.59 3.28 6.70 5.50 3.60 7.95 4.92 3.59 3.28
Dec-07 4.04 4.18 3.11 3.07 4.01 4.18 3.12 4.20 4.19 3.10 3.07
Jun-08 2.55 2.82 2.28 2.44 2.52 2.78 2.29 2.73 3.03 2.28 2.44
Dec-08 0.79 1.26 1.59 1.23 0.75 1.26 1.65 1.01 1.28 1.55 1.23
Jun-09 0.02 0.61 1.53 1.08 -0.01 0.63 1.53 0.14 0.53 1.53 1.08
Dec-09 0.56 1.07 2.24 2.20 0.56 1.13 2.15 0.57 0.85 2.31 2.20
Jun-10 2.64 2.09 3.02 2.77 2.66 2.14 3.08 2.53 1.90 2.97 2.77
Dec-10 3.08 2.32 3.51 3.13 3.10 2.32 3.80 2.98 2.31 3.32 3.13
Jun-11 3.76 3.00 3.86 3.47 3.79 3.03 3.84 3.58 2.85 3.87 3.47
Dec-11 2.36 1.85 4.03 2.79 2.29 1.87 3.88 2.71 1.73 4.13 2.79
Jun-12 2.17 1.69 4.26 2.72 2.08 1.73 4.27 2.65 1.51 4.26 2.72
Dec-12 3.54 2.34 5.02 3.31 3.35 2.35 4.54 4.50 2.27 5.32 3.31
Jun-13 4.51 2.83 4.67 3.75 4.33 2.82 3.98 5.41 2.90 5.08 3.75
Dec-13 5.26 3.62 4.27 3.60 5.09 3.67 3.72 6.13 3.39 4.57 3.60
Jun-14 5.70 4.17 4.73 3.35 5.55 4.27 4.47 6.45 3.79 4.86 3.35
Dec-14 6.15 4.57 5.10 2.79 6.04 4.60 4.58 6.70 4.44 5.35 2.79
Jun-15 5.86 4.24 4.06 2.50 5.80 4.19 4.05 6.18 4.45 4.06 2.50
Dec-15 4.80 3.74 3.22 2.39 4.79 3.67 3.26 4.82 4.01 3.21 2.39
Mar-16 4.06 3.23 3.10 2.24 4.03 3.21 2.91 4.22 3.35 3.19 2.24
Notes: Europe refers to the European Union, Norway and Switzerland. Banks included in the sample are listed in Bloomberg
regional banking indices. The horizontal 3-standard-deviation line represents a minimal level of “safety” based on
calibration from previous crises. The distance-to-default (DTD) is a measure that uses a combination of bank reported data,
and market information to calculate the number of standard deviations a bank is from the default point, where the market
values of assets equals the book value of debt. The formula is derived from the option pricing model of Black and Scholes
(1973).
Source: Thomson Reuters, Bloomberg, OECD calculations. See Annex for details.
0
1
2
3
4
5
6
7
8
Std. dev.
United States Europe Asia Latin America
Distance-to-default has fallen
Bank default risk is measured by the distance-to-default (DTD). A bank defaults when DTD moves to
0 and below. Recently the average DTD of banks has fallen in all regions. In Asia, the DTD is back to
levels last seen in 2010. In Latin America, the DTD is at levels last seen in 2009. US banks appear to
be the strongest at this point. Nevertheless the situation bears watching closely.
27
Figure 14. Credit rating uplifts for the debt of large banks, 2007–2015
All banks
25th%
tile
Median
75th%
tile
Mean
2007 1 2 3 2.16
2008 1 2 3 2.33
2009 2 3 5 3.10
2010 2 3 4 3.11
2011 1 2 3 2.28
2012 1 2 3 2.42
2013 1 2 3 2.50
2014 1 2 3 2.46
2015 2 3 3 2.59
Globally systemically important banks
(G-SIBs)
25th%
tile
Median
75th%
tile
Mean
2007 1 2 2 1.96
2008 2 2 2 2.15
2009 2 3 4 3.00
2010 2 3 4 3.04
2011 2 3 3 2.48
2012 2 3 3 2.60
2013 2 3 3 2.63
2014 2 3 3 2.55
2015 3 3 4 2.96
Other banks
25th%
tile
Median
75th%
tile
Mean
2007 1 2 3 2.19
2008 1 2 3 2.36
2009 2 3 5 3.11
2010 2 3 5 3.13
2011 1 2 3 2.24
2012 1 2 3 2.37
2013 1 2 3 2.46
2014 1 2 3 2.44
2015 2 2 3 2.52
Notes: Based on the credit rating uplift due to assumed external support, obtained by subtracting (the numerical equivalent of) the
“stand-alone” credit rating from (the numerical equivalent of) the “all-in” credit rating for a sample of 204 international banks from 23
OECD countries. Mean, median and interquartile range are shown by straight line, dotted line and light-grey shaded area, respectively.
Source: OECD Secretariat calculations based on publicly available data from Moody’s website. See Annex for details.
6
0
1
2
3
4
5
6
2007 2008 2009 2010 2011 2012 2013 2014 2015
Mean Median
0
1
2
3
4
5
6
2007 2008 2009 2010 2011 2012 2013 2014 2015
0
1
2
3
4
5
6
2007 2008 2009 2010 2011 2012 2013 2014 2015
A measure of the value of implicit guarantees for the debt of large banks
One measure of the value of (the perception of) implicit guarantees for the debt of banks is the credit rating
uplift due to assumed external support. The uplift is obtained as the difference between an issuing banks’ “all-
in” and its “stand-alone” credit ratings, where the latter abstracts from external support unlike the “all-in”
rating. The average uplift for a sample of large international banks decreased from its peak levels obtained at
the end of 2009-2010, although it has been slightly increasing again more recently. It tends to be larger for
banks considered globally systemically important than for other banks.
28
Figure 15. Bank beta indicator for large listed banks, 1999–2016
Table 14. Average beta calculated using MSCI regional equity indices for large listed banks, 2003–
2016
All Large Banks G-SIBs Other Large Banks
United
States
Europe Asia
Latin
America
United
States
Europe Asia
United
States
Europe Asia
Latin
America
Jun-03 1.24 1.29 1.10 1.47 1.31 1.34 1.49 0.95 1.06 0.43 1.47
Dec-03 1.17 1.21 1.29 1.18 1.22 1.25 1.84 0.95 1.04 0.43 1.18
Jun-04 1.08 1.12 1.09 1.07 1.11 1.13 1.69 0.91 1.07 0.36 1.07
Dec-04 1.04 1.06 0.91 1.11 1.07 1.08 1.32 0.88 0.98 0.43 1.11
Jun-05 1.02 1.07 0.73 1.03 1.03 1.08 1.04 0.96 1.01 0.38 1.03
Dec-05 0.94 1.10 0.82 1.05 0.93 1.10 1.22 1.01 1.06 0.39 1.05
Jun-06 0.97 1.10 0.79 1.20 0.97 1.11 1.19 0.96 1.08 0.37 1.20
Dec-06 1.06 1.12 0.72 1.12 1.10 1.12 1.00 0.82 1.13 0.43 1.12
Jun-07 1.17 1.11 0.73 1.02 1.22 1.12 0.92 0.86 1.06 0.55 1.02
Dec-07 1.40 1.15 0.99 1.02 1.43 1.16 1.04 1.27 1.10 0.96 1.02
Jun-08 1.61 1.27 1.04 0.97 1.64 1.29 1.24 1.46 1.16 0.90 0.97
Dec-08 1.62 1.36 0.99 1.09 1.67 1.37 1.19 1.34 1.33 0.86 1.09
Jun-09 2.03 1.56 0.96 1.08 2.08 1.57 1.19 1.76 1.53 0.80 1.08
Dec-09 2.63 1.78 0.96 1.03 2.65 1.77 1.23 2.50 1.82 0.76 1.03
Jun-10 1.52 1.50 0.81 1.01 1.52 1.51 0.86 1.53 1.47 0.77 1.01
Dec-10 1.38 1.49 0.79 1.01 1.38 1.51 0.75 1.41 1.40 0.81 1.01
Jun-11 1.37 1.32 0.81 1.10 1.36 1.33 1.03 1.42 1.28 0.67 1.10
Dec-11 1.61 1.57 0.78 1.07 1.65 1.57 0.81 1.44 1.56 0.76 1.07
Jun-12 1.71 1.66 0.79 1.02 1.76 1.67 0.75 1.47 1.66 0.82 1.02
Dec-12 1.70 1.70 0.83 1.12 1.78 1.71 0.99 1.32 1.61 0.73 1.12
Jun-13 1.43 1.68 0.87 1.21 1.49 1.72 1.18 1.16 1.47 0.68 1.21
Dec-13 1.31 1.42 0.87 1.13 1.35 1.44 1.16 1.07 1.32 0.71 1.13
Jun-14 1.21 1.28 0.80 1.16 1.25 1.27 1.01 1.04 1.28 0.69 1.16
Dec-14 1.12 1.26 0.74 1.53 1.14 1.27 1.10 1.04 1.23 0.56 1.53
Jun-15 1.14 1.21 0.78 1.50 1.17 1.24 1.03 1.04 1.09 0.66 1.50
Dec-15 1.18 1.14 0.85 1.38 1.20 1.17 1.00 1.12 0.98 0.78 1.38
Mar-16 1.28 1.25 0.82 1.37 1.31 1.28 1.00 1.17 1.10 0.74 1.37
Source: Bloomberg, OECD calculations. See Annex for details.
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Beta
Beta calculated using Regional MSCI Indices
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Beta
Beta calculated using Global MSCI Index
United States Europe Asia Latin America
Bank beta indicator
Beta is defined as the covariance of a firm’s stock returns with the market divided by variance of
market returns (here calculated over a rolling window). The beta for a bank stock is a measure of the
degree to which its returns co-vary with the market and therefore cannot be eliminated through
diversification. Beta is a key input into the calculation of the bank-specific equity risk premium (the
product of bank beta and the market equity risk premium). In crisis periods, bank betas rise on
average raising their equity risk premia and tend to do so in a correlated way.
29
Table 15. Average beta calculated using MSCI global equity index for large listed banks, 2003–
2016
All Large Banks G-SIBs Other Large Banks
United
States
Europe Asia
Latin
America
United
States
Europe Asia
United
States
Europe Asia
Latin
America
Jun-03 1.47 1.37 0.15 0.66 1.56 1.42 0.17 1.10 1.14 0.12 0.66
Dec-03 1.34 1.28 0.46 0.70 1.40 1.32 0.64 1.08 1.14 0.18 0.70
Jun-04 1.13 1.14 1.01 1.24 1.16 1.16 1.50 0.97 1.05 0.43 1.24
Dec-04 1.07 1.11 0.71 1.57 1.10 1.14 0.88 0.91 1.00 0.51 1.57
Jun-05 1.11 0.98 0.58 1.27 1.14 0.99 0.82 1.00 0.95 0.33 1.27
Dec-05 0.93 1.09 0.57 1.48 0.92 1.09 0.80 0.97 1.06 0.33 1.48
Jun-06 0.85 1.37 0.60 2.15 0.87 1.38 0.85 0.77 1.29 0.33 2.15
Dec-06 0.84 1.50 0.72 2.27 0.89 1.50 0.94 0.56 1.52 0.50 2.27
Jun-07 1.00 1.42 0.66 2.01 1.04 1.43 0.65 0.74 1.40 0.67 2.01
Dec-07 1.35 1.42 0.60 2.00 1.39 1.43 0.33 1.16 1.34 0.83 2.00
Jun-08 1.45 1.62 0.63 1.69 1.49 1.65 0.61 1.24 1.44 0.65 1.69
Dec-08 1.75 1.49 0.59 1.75 1.83 1.49 0.52 1.35 1.45 0.64 1.75
Jun-09 2.25 1.70 0.54 1.61 2.33 1.70 0.46 1.86 1.67 0.59 1.61
Dec-09 2.68 2.19 0.50 1.36 2.72 2.18 0.48 2.51 2.25 0.51 1.36
Jun-10 1.38 2.11 0.41 1.35 1.38 2.12 0.26 1.36 2.08 0.51 1.35
Dec-10 1.28 2.03 0.43 1.18 1.27 2.06 0.26 1.30 1.90 0.55 1.18
Jun-11 1.18 1.76 0.53 1.02 1.17 1.78 0.48 1.23 1.67 0.56 1.02
Dec-11 1.58 1.97 0.43 1.12 1.61 1.97 0.30 1.38 1.95 0.51 1.12
Jun-12 1.70 2.16 0.38 1.15 1.76 2.16 0.23 1.42 2.15 0.48 1.15
Dec-12 1.54 2.45 0.44 1.37 1.62 2.48 0.40 1.17 2.31 0.46 1.37
Jun-13 1.41 2.27 0.48 1.29 1.47 2.34 0.48 1.11 1.98 0.48 1.29
Dec-13 1.29 1.70 0.63 1.20 1.35 1.73 0.58 1.00 1.59 0.66 1.20
Jun-14 1.19 1.53 0.57 1.11 1.24 1.53 0.60 0.95 1.54 0.55 1.11
Dec-14 1.27 1.51 0.22 0.86 1.29 1.51 0.23 1.16 1.47 0.21 0.86
Jun-15 1.26 1.44 0.27 1.61 1.28 1.48 0.24 1.15 1.26 0.28 1.61
Dec-15 1.27 1.24 0.52 1.65 1.28 1.29 0.54 1.21 1.04 0.51 1.65
Mar-16 1.36 1.34 0.54 1.50 1.39 1.38 0.50 1.24 1.18 0.56 1.50
Notes: Europe refers to the European Union, Norway and Switzerland. Banks included in the sample are listed in Bloomberg
regional banking indices. Beta is defined as the covariance of a bank's stock returns with MSCI benchmark (either related
regional or global benchmarks) divided by variance of market returns. It is an indicator of the systemic importance a bank
with respect to the economy.
Source: Bloomberg, OECD calculations. See Annex for details.
30
Table 16. Total investment of pension funds and all retirement vehicles, 2015
Pension funds
All retirement
vehicles
Millions of
national
currency
Millions of
USD
% of GDP % change
% of all
retirement
vehicles
% of GDP
Australia 1,894,431 1,454,923 117.7 10.1 97.1 121.2
Austria 19,646 21,389 5.8 3.3
Belgium 24,117 27,018 5.9 8.5
Canada 1,583,494 1,182,241 79.8 5.2 50.8 157.0
Chile 109,433,421 154,711 69.6 8.9 100.0 69.6
Czech Republic 373,069 15,029 8.3 10.0 100.0 8.3
Denmark 888,707 130,118 44.8 -4.7 22.0 203.3
Estonia 2,613 2,844 12.8 18.5 88.2 14.5
Finland 105,258 114,594 50.8
France 12,200 13,282 0.6 17.6 5.6 10.0
Germany 199,197 216,865 6.6 2.4
Greece 1,135 1,236 0.6 2.8
Hungary 1,381,292 4,819 4.1 5.7 72.3 5.7
Iceland 3,266,214 25,204 149.2 12.0 94.8 157.3
Ireland 105,400 114,749 49.1 91.2 53.9
Israel 627,569 160,833 54.5 5.1
Italy 114,600 124,765 7.0 6.5 79.5 8.8
Japan 159,757,300 1,325,787 32.0 1.6 100.0 32.0
Korea 136,427,700 116,356 8.8 25.6 30.2 29.0
Luxembourg 1,444 1,572 2.8 -2.7
Mexico 2,789,870 162,140 15.4 4.2 93.0 16.6
Netherlands 1,210,321 1,317,676 178.4 1.7
New Zealand 53,235 36,317 22.2 21.8 100.0 22.2
Norway 283,126 32,137 9.0 8.7
Poland 142,810 36,608 8.0 -5.6 94.0 8.5
Portugal 18,164 19,775 10.1 3.8
Slovak Republic 8,037 8,750 10.3 1.2 100.0 10.3
Slovenia 1,641 1,786 4.3 4.2 61.0 7.0
Spain 103,862 113,074 9.6 3.7 66.2 14.5
Sweden 380,000 45,019 9.1 4.4 13.6 67.4
Switzerland 797,648 804,000 124.7 2.6
Turkey 42,959 14,762 2.2 24.0
United Kingdom 1,818,507 2,694,846 97.5 1.9
United States 14,299,033 14,299,033 79.7 -0.9 59.9 133.1
OECD 24,794,259 84.5
Source: OECD Global Pension Statistics; the French Asset Management Association; Bank of Korea; Bank of Japan; Bank
of Mexico; Reserve Bank of New Zealand; Willis Towers Watson, Global Pension Assets Study 2016 (Switzerland). See
Annex for details.
Pension funds’ investments fell slightly in 2015 relatively to 2014
Pension funds’ investments fell slightly in the OECD area in 2015 relatively to their 2014 level (USD
25.2 trillion according to the last report Pension Markets in Focus 2015). They were still close to USD
25 trillion at the end of 2015. Pension funds’ investments, expressed in national currency, grew in most
countries between 2014 and 2015, except Denmark, Luxembourg, Poland and the United States. In
Denmark however, private pension investments are mainly channelled through life insurance
companies instead of pension funds. The overall size of investments in the pension system in Denmark
exceeded two times its GDP. The decline in OECD total pension fund investments was partly driven by
the United States, which represented 58% of all pension funds’ investment in the OECD area.
31
.
Figure 16. Pension funds' real net investment rate of return in selected OECD countries, 2014–2015
Table 17. Pension funds' real net rate of investment returns in selected OECD countries, 2005–2015
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Australia 10.1 8.9 12.9 -11.4 -10.2 5.6 5.3 0.6 10.3 8.3 6.4
Austria 9.0 3.8 -1.8 -14.4 7.3 3.7 -6.0 5.5 2.9 6.2 1.2
Belgium 10.3 10.3 7.7 -22.3 13.4 4.4 -4.6 9.2 5.8 10.7
Canada 10.7 10.8 1.0 -16.9 10.3 7.6 1.8 7.9 9.8 7.8 1.4
Chile 5.0 14.4 4.4 -24.1 22.0 8.3 -6.0 5.1 3.5 8.1 1.5
Czech Republic 2.7 1.3 -2.0 -1.5 -0.6 0.7 0.5 0.2 0.2 1.2 0.9
Denmark 14.7 1.4 -3.3 5.1 1.2 7.1 12.2 5.3 -4.5 16.6 0.8
Estonia 7.2 2.2 -5.4 -32.4 14.8 2.1 -8.0 5.2 0.9 4.7 2.1
Finland 5.2 6.0 6.2 5.3
Germany 3.4 3.2 1.0 0.5 3.9 3.6 1.0 2.7 2.8 4.4
Greece 2.3 0.3 -7.8 -5.6 5.0 7.7 6.5 4.6
Hungary 7.6 1.2 -3.9 -21.7 12.8 4.2 7.8 7.0 9.6 3.7
Iceland 11.8 8.8 0.4 -23.1 0.9 1.3 2.3 7.1 4.9 7.2 6.8
Ireland -7.4 -35.7
Israel 7.2 5.7 3.5 -16.3 20.2 6.9 -4.3 7.9 8.3 5.8 3.6
Italy 6.1 2.1 0.3 -5.3 5.3 1.2 -2.8 4.0 3.9 5.7 2.6
Korea 0.6 6.0 0.6 -2.7 -2.2 2.1 0.0 3.3 2.6 2.3
Luxembourg 4.9 -2.5 -11.4 6.5 0.7 -2.3 6.0 1.7 8.3 0.6
Mexico 4.8 5.6 -0.1 -7.8 7.5 6.6 1.2 9.7 -1.5 4.7
Netherlands 10.9 6.8 0.6 -17.3 11.5 8.9 4.3 9.5 1.6 15.1 7.1
New Zealand 4.3 8.8 5.0 -5.5 -9.5 10.5 3.1 1.6 9.5 7.2
Norway 9.2 7.4 3.1 -10.6 9.8 5.5 -0.1 6.1 7.9 5.1 1.1
Poland 12.9 13.4 1.5 -17.3 8.9 7.2 -9.1 1.6 2.7 -4.0
Portugal 7.1 7.1 5.5 -13.2 11.6 -3.0 -7.3 5.8 4.9 6.9 2.1
Slovak Republic -0.1 -8.9 1.0 0.0 -3.8 0.4 1.1 3.9 1.0
Slovenia -1.0 -5.4 4.2 1.8 -1.8 4.5 2.5 6.7 2.4
Spain -9.9 6.9 -2.2 -2.3 3.7 7.9 8.0 2.0
Sweden -1.0 7.9 6.7
Switzerland 9.2 5.3 0.2 -13.8 9.9 2.8 0.6 7.5 5.9 7.2
Turkey 22.1 1.4 13.2 0.9 17.6 1.9 9.6 -7.6 5.6 -5.9
United Kingdom 19.8 10.3 0.9 -15.9 13.4 11.2 8.3 9.0 5.4 5.2 3.0
United States 1.4 5.4 -1.5 -24.4 8.6 5.3 -4.3 4.6 11.2 3.3 -1.7
Note: All data are expressed in percent.
Source: OECD Global Pension Statistics and other national sources. See Annex for details.
7.1
6.8
6.4
5.3
4.6
3.7
3.6
3.3
3.0
2.6
2.4
2.1
2.1
2.1
2.0
1.5
1.4
1.2
1.1
1.0
0.9
0.8
0.6
0.4
-1.7
-4.0
-5.9
-8 -6 -4 -2 0 2 4 6 8
Netherlands
Iceland
Australia
Finland
Greece
Hungary
Israel
Japan
United Kingdom
Italy
Slovenia
Estonia
Portugal
Simple average
Spain
Chile
Canada
Austria
Norway
Slovak Republic
Czech Republic
Denmark
Luxembourg
Weighted average
United States
Poland
Turkey %
The low returns in 2015 mostly explain the fall in pension funds’ investments
Real net investment returns were low in 2015, with a weighted OECD average at 0.4%. These low real
net returns help explain the relative fall in OECD pension funds’ investments. Real investment rates of
return ranged from positive values, peaking at 7.1% in the Netherlands, to negative values, down to -
5.9% for Turkey’s personal plans. Twenty-two countries witnessed positive investment rates of return,
but lower than 2% for eight of them. Three OECD countries had negative returns in 2015: Poland,
Turkey and the United States which dragged the OECD weighted average close to 0.
32
Figure 17. Pension fund asset allocation in selected asset classes in selected OECD countries,
2015
Note: All data are expressed in percent of total investment.
Source: OECD Global Pension Statistics; Australian Bureau of Statistics; Bank of Japan. See Annex for details.
0 10 20 30 40 50 60 70 80 90 100
Poland
Australia
United States
Iceland
Finland
Chile
Belgium
Netherlands
Ireland
Norway
Austria
Estonia
Canada
Luxembourg
United Kingdom
Italy
Portugal
Turkey
Denmark
Spain
Greece
Japan
Hungary
Israel
Germany
Slovak Republic
Slovenia
Czech Republic
Shares Bills and bonds Other
Negative returns in stock markets may be behind the weak performance of pension funds’
investments in 2015
Pension funds’ low performance may be due to the negative evolution of stock markets in 2015. The
S&P 500 and FTSE 100 indices exhibited lower levels at the end of 2015 compared to 2014. The MSCI
Pacific Index slightly increased by 0.4% at the end of 2015 compared to its level at the end of 2014.
These developments may have weakened pension funds’ investment performance, especially in the case
of the United States, where pension funds invested 47% of their portfolios in shares in 2015.
33
Figure 18. Foreign direct investment inflows by region, 2005–2015
Table 18. FDI inflows by selected regions, 2005–2015
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015p
Total World 982 1,447 2,000 1,577 1,181 1,505 1,700 1,470 1,578 1,400 1,833
European Union (EU) 458 527 828 317 377 380 415 294 319 282 434
United States 113 243 221 310 150 206 236 194 217 112 385
China 104 124 156 172 131 244 280 241 291 268 250
Other G20 118 237 413 429 251 314 371 339 400 348 275
Rest-of-the-world 189 316 382 349 272 360 398 402 351 391 490
OECD 619 955 1,316 845 672 715 874 699 777 572 1,063
G20 countries 619 871 1,152 1,038 697 911 1,063 875 1,033 808 1,020
G20-OECD countries 445 641 826 629 417 461 558 442 544 339 614
G20 -non OECD countries 174 230 326 408 280 450 505 433 489 468 406
Table 19. FDI outflows by selected regions, 2005–2015
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015p
Total World 852 1,375 2,182 1,730 1,089 1,408 1,529 1,215 1,283 1,368 1,626
European Union (EU) 556 664 1,217 752 348 478 480 256 279 290 508
United States 36 245 414 329 310 301 419 340 329 337 320
China 14 24 17 57 44 58 48 65 73 123 188
Other G20 81 220 270 371 212 247 296 298 344 335 286
Rest-of-the-world 165 223 265 221 175 324 286 256 259 284 325
OECD 728 1,148 1,897 1,414 871 1,029 1,213 921 926 875 1,183
G20 countries 404 805 1,408 1,196 786 860 1,042 826 816 881 871
G20 - OECD countries 363 698 1,303 1,029 689 711 904 705 636 635 617
G20 - non OECD countries 41 108 104 167 96 149 138 121 180 245 254
Notes: All data are expressed in US dollar billion. p: preliminary data; Data are updated as of April 2016. By definition, inward and
outward FDI worldwide should be equal. However, in practice, there are statistical discrepancies between inward and outward FDI.
Reference to ‘global FDI flows’ refer to the average of these two figures.
Source: OECD Foreign direct investment statistics database and IMF. See Annex for details.
0
300
600
900
1 200
1 500
1 800
2 100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015p
USD bln
EU United States China Other G20 Economies Rest-of-the-world OECD
Global trends in FDI flows
Global foreign direct investment (FDI) flows stagnated following the global financial crisis, and,
despite a 25% increase in 2015, still remain about one tenth below their pre-crisis peak. The
prolonged recovery in FDI is largely due to persistent weakness in the EU, and, to a much lesser
extent, the United States following the financial crisis. In contrast, FDI inflows to China are higher
than before the crisis. FDI inflows to the non-OECD G20 economies fell in 2015 largely due to
drops for Brazil, Indonesia, Russia, and South Africa as these economies struggled with lower
commodity prices.
34
Figure 19. Foreign direct investment by instruments, 2005–2015
Source: OECD Foreign direct investment statistics database and IMF.
0
200
400
600
800
1000
1200
1400
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USDbln
OECD
0
200
400
600
800
1000
1200
1400
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USDbln
Non-OECD
Equity Reinvestmentofearnings Debt
Equity capital FDI flows surged in 2015
In OECD economies, the immediate fall after the financial crisis in foreign direct investments (FDI)
was mainly the result of a fall in reinvested earnings and debt. While both reinvested earnings and
debt financing picked up in 2009, equity investments continued to decline quite substantially until
2014. In 2015, equity capital more than doubled from the previous year; debt FDI also increased. For
non-OECD economies, reinvested earnings and to some extent debt have come to play a more
important role as a source of funding of FDI after the financial crisis.
35
Table 20. FDI inflows and outflows by instrument for selected regions, 2005–2015
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
FDI inflows - Equity capital
World 597 806 1202 1145 705 827 776 692 735 567 927
OECD 392 532 824 727 452 469 419 345 363 255 609
G20 396 492 761 746 426 497 525 454 546 336 583
OECD G20 283 346 546 492 275 289 287 243 289 141 383
Non OECD G20 113 146 215 254 151 208 238 212 257 195 200
Rest of the World 91 128 164 164 102 151 119 134 115 117 118
FDI inflows - Reinvestment of earnings
World 258 395 500 291 309 549 587 551 547 630 568
OECD 156 258 322 123 128 243 244 255 257 311 267
G20 155 216 238 164 152 324 341 306 320 352 290
OECD G20 113 163 182 87 59 141 142 154 175 195 154
Non OECD G20 42 52 56 77 93 184 199 151 145 157 136
Rest of the World 61 85 122 90 88 122 143 145 146 163 165
FDI inflows - Debt
World 127 245 298 141 167 129 337 227 295 202 338
OECD 71 164 170 -6 91 4 211 99 157 6 187
G20 68 164 153 128 118 90 196 115 167 119 147
OECD G20 49 132 98 51 83 32 129 45 79 3 77
Non OECD G20 19 32 55 77 36 58 68 70 87 116 70
Rest of the World 37 49 72 70 39 67 59 58 51 80 81
FDI outflows - Equity capital
World 495 782 1185 992 570 685 686 576 571 461 724
OECD 437 671 1039 846 439 486 541 425 339 199 531
G20 225 419 690 625 344 421 446 385 383 272 348
OECD G20 204 354 637 544 277 314 351 281 201 105 226
Non OECD G20 21 65 54 82 67 106 95 104 183 167 121
Rest of the World 37 46 92 64 64 93 49 47 50 95 73
FDI outflows - Reinvestment of earnings
World 266 562 679 444 461 679 717 645 638 734 628
OECD 226 507 607 354 381 541 555 518 499 573 480
G20 168 438 524 407 347 490 541 475 469 525 444
OECD G20 156 418 500 366 328 449 494 441 431 464 372
Non OECD G20 11 20 24 41 19 41 47 35 38 61 72
Rest of the World 29 36 49 50 60 97 115 92 101 100 77
FDI outflows - Debt
World 91 31 318 294 58 44 127 -6 74 173 274
OECD 65 -29 251 213 50 2 117 -23 88 104 172
G20 11 -51 194 163 95 -51 55 -35 -37 84 80
OECD G20 3 -74 167 119 85 -52 58 -17 5 67 19
Non OECD G20 9 22 27 44 10 2 -3 -17 -41 17 61
Rest of the World 17 38 40 36 -3 40 13 34 27 53 40
Notes: All date are expressed in US dollar billion. For OECD countries who did not report FDI aggregates by instrument to
the OECD, instruments were estimated using data on instruments available from the IMF BOP database; or by using
instrument shares observed in non-revised for historical years. Missing instruments for 2015 were estimated by distributing
total FDI equally among the instruments. Instruments for non OECD G20 countries were gathered from national source
websites and from the IMF. Missing instruments for those countries were estimated by distributing total FDI equally among
instruments or by applying the average instrument shares observed in previous periods. Instruments for the rest of the world
were estimated by applying the instruments shares observed on data available in the IMF BOP database for the rest of the
world. 2015 data were estimated by applying the same instrument shares as observed in 2014. World is equal to OECD plus
non-OECD G20 plus Rest of the World. Data are updated as of April 2016.
Source: OECD and IMF.
36
Figure 20. Total FDI outflows from selected OECD countries with resident SPEs, 2005–2015
Figure 21. Total FDI inflows to selected OECD countries with resident SPEs, 2005–2015
Source: OECD calculations, OECD and IMF.
0
100
200
300
400
500
600
700
800
900
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USDbln
Non-SPE SPE
0
200
400
600
800
1000
1200
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USDbln
Thousands
Non-SPE SPE
Capital passing through Special Purpose Entities (SPEs) dropped significantly in 2014 and 2015
Special Purpose Entities (SPEs) are entities whose role is to facilitate the internal financing of
multinational enterprises but that have little or no physical presence in an economy. By excluding
such entities from their FDI statistics, countries have a much better measure of the FDI into their
country that is having a real impact on their economy. FDI flows to and from SPEs are significant for
certain countries and are much more volatile than FDI flows into non-SPE or operating affiliates.
While flows to and from SPEs dropped significantly in 2014 and 2015, it is too soon to say whether
this reflects a long term decline in the use of SPEs.
37
Table 21. FDI outflows for countries with SPEs, 2005–2015
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015P
Data including SPEs:
Austria 78,074 11,226 66,751 28,534 12,355 -14,065 32,533 20,492 6,703 5,051 14,780
Chile2
6,212 10,534 13,617 17,040 8,388 11,803 15,513
Denmark 17,506 7,260 16,985 11,741 2,397 -1,423 9,627 -13,008 6,960 7,600 11,910
Hungary 12,656 19,084 67,478 70,686 4,498 -41,146 21,436 12,358 -2,819 4,813 -5,224
Iceland2
460 -295 -594
Luxembourg 124,542 114,537 265,999 135,226 227,057 205,556 374,294 369,305 518,540 235,198 304,222
Netherlands 248,511 461,992 205,473 364,080 385,931 210,620 388,351 257,720 417,751 98,586 78,251
Poland3
2,864 7,660 3,490 3,437 3,657 6,148 3,677 -2,660 -1,346 1,595 2,832
Portugal 1,643 6,214 5,262 1,163 -367 -9,783 13,447 -8,210 -2,043 4,108 8,167
Total 485,795 627,973 631,438 614,868 641,740 366,442 856,983 653,037 952,593 368,460 429,858
Data excluding SPEs.
Austria 11,139 11,981 35,847 28,652 10,999 9,585 21,933 13,114 15,565 5,066 12,403
Chile2
2,183 2,171 2,573 8,041 6,487 10,226 12,470 17,252 8,780 11,857 15,550
Denmark 13,145 14,462 13,115 15,271 3,689 1,382 11,278 7,359 7,174 8,401 13,219
Hungary 2,171 4,346 4,300 2,638 1,852 1,173 4,713 11,717 1,870 3,521 1,534
Iceland2
7,084 5,495 10,105 -4,250 2,248 -2,368 18 -3,205 460 -257 -599
Luxembourg 9,034 7,183 73,363 11,737 6,709 20,842 9,052 2,771 25,278 23,438 39,378
Netherlands 105,999 72,534 55,691 68,345 26,267 68,363 34,818 6,174 69,960 55,971 113,449
Poland3
1,347 3,857 1,682 1,858 1,807 6,149 1,028 2,905 -451 1,975 4,060
Portugal 2,634 4,435 5,457 722 814 -9,956 13,917 -8,096 -1,035 4,539 7,979
Total 154,736 126,464 202,131 133,013 60,872 105,396 109,228 49,991 127,601 114,509 206,971
SPEs:
Austria 66,936 -755 30,905 -118 1,356 -23,651 10,600 7,378 -8,862 -15 2,377
Chile -274 308 1,147 -212 -393 -54 -37
Denmark 4,361 -7,202 3,870 -3,530 -1,293 -2,804 -1,651 -20,367 -214 -801 -1,308
Hungary 10,484 14,739 63,178 68,049 2,646 -42,319 16,723 641 -4,689 1,292 -6,758
Iceland 0 -37 5
Luxembourg 115,508 107,354 192,636 123,490 220,348 184,714 365,242 366,534 493,262 211,761 264,844
Netherlands 142,512 389,458 149,782 295,735 359,664 142,257 353,533 251,546 347,791 42,615 -35,198
Poland 1,516 3,803 1,808 1,579 1,850 -1 2,649 -5,565 -895 -379 -1,227
Portugal -991 1,779 -194 441 -1,181 174 -470 -113 -1,008 -431 189
Total 340,326 509,175 441,985 485,646 583,116 258,678 747,773 599,842 824,992 253,951 222,887
Notes: All data are expressed in US dollar million. |: breaks in series; p: Preliminary data; Data are updated as of April 2016.
1. Information on resident SPEs for Estonia and Sweden (FDI flows only) is confidential. This information is not yet available
separately for Canada, Ireland and Mexico. The information is available separately for Austria, Chile, Denmark, Hungary, Iceland,
Korea, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom. However,
the information is not displayed in the table for all countries, due to limited availability of historical data or to differences in data
vintages. Resident SPEs are not present or not significant in Australia, the Czech Republic, Finland, France, Germany, Greece,
Israel, Italy, Japan, New Zealand, the Slovak Republic, Slovenia, Turkey, and the United States.
2. Data for Chilean SPEs are not available from 2005 to 2008. Data for Iceland's SPEs are available from 2013 onward.
3. Data for 2015 for Poland correspond to asset/liability figures, while data for earlier years correspond to directional figures.
Source: OECD calculations, OECD and IMF.
38
Table 22. FDI inflows for countries with SPEs, 2005–2015
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015P
Data including SPEs:
Austria 77,903 5,557 56,752 7,144 11,140 -21,694 17,184 7,372 -3,765 9,955 5,803
Chile2
12,371 16,583 16,674 24,977 17,878 21,231 20,176
Denmark 13,437 1,646 10,909 -4,007 -430 -12,547 9,598 -18,592 605 2,171 2,156
Hungary 20,300 19,597 70,003 72,408 5,170 -37,264 23,628 15,050 -2,745 8,704 -4,001
Iceland2
412 439 -128
Luxembourg 116,107 128,557 191,162 105,765 204,341 222,023 412,774 410,089 709,000 193,338 250,784
Netherlands 189,851 313,143 334,444 282,344 339,086 135,774 349,932 259,371 370,492 129,847 90,759
Poland3
9,723 18,379 21,663 13,857 11,892 12,799 18,290 7,130 2,734 11,934 6,211
Portugal 3,462 10,600 2,876 3,542 1,611 2,424 7,435 8,873 2,672 7,616 6,031
Total 430,783 497,479 687,809 481,052 585,181 318,098 855,515 714,269 1,097,285 385,235 377,790
Data excluding SPEs.
Austria 10,778 4,757 25,489 7,212 9,269 2,576 10,625 3,990 5,719 9,326 3,838
Chile2
6,984 7,298 12,534 15,150 12,051 15,220 16,815 24,960 18,170 21,161 20,028
Denmark 8,552 9,306 7,269 -811 392 -9,167 11,488 418 1,050 3,471 3,643
Hungary 7,711 6,817 3,952 6,314 1,998 2,195 6,315 14,427 3,406 7,489 1,271
Iceland2
3,076 3,858 6,822 919 79 245 1,107 1,025 397 447 -136
Luxembourg 5,976 31,802 -28,266 11,194 20,667 35,661 13,302 4,423 15,368 12,074 24,600
Netherlands 39,077 13,901 119,733 5,751 38,748 -7,185 24,391 20,121 51,363 52,200 72,663
Poland3
8,207 14,576 19,855 12,279 10,043 12,800 15,953 12,441 3,626 12,532 7,438
Portugal 4,360 7,227 3,086 2,099 1,282 1,507 5,997 8,963 2,405 7,630 7,381
Total 94,720 99,544 170,474 60,109 94,528 53,852 105,994 90,768 101,504 126,330 140,726
SPEs:
Austria 67,126 800 31,263 -68 1,871 -24,269 6,558 3,381 -9,483 629 1,965
Chile 320 1,363 -141 17 -291 70 148
Denmark 4,885 -7,660 3,640 -3,196 -822 -3,380 -1,890 -19,010 -445 -1,299 -1,487
Hungary 12,589 12,780 66,052 66,093 3,172 -39,458 17,313 623 -6,151 1,214 -5,272
Iceland 15 -8 8
Luxembourg 110,132 96,754 219,428 94,570 183,675 186,362 399,473 405,666 693,632 181,264 226,184
Netherlands 150,774 299,242 214,710 276,592 300,338 142,959 325,541 239,251 319,129 77,648 18,095
Poland 1,516 3,803 1,808 1,579 1,850 -1 2,337 -5,311 -892 -598 -1,227
Portugal -898 3,372 -210 1,443 329 917 1,438 -90 267 -15 -1,350
Total 346,123 409,091 536,691 437,012 490,732 264,492 750,629 624,527 995,780 258,905 237,064
Notes: All data are expressed in US dollar million. |: breaks in series; p: Preliminary data; Data are updated as of April 2016.
1. Information on resident SPEs for Estonia and Sweden (FDI flows only) is confidential. This information is not yet available
separately for Canada, Ireland and Mexico. The information is available separately for Austria, Chile, Denmark, Hungary, Iceland,
Korea, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom. However, the
information is not displayed in the table for all countries, due to limited availability of historical data or to differences in data vintages.
Resident SPEs are not present or not significant in Australia, the Czech Republic, Finland, France, Germany, Greece, Israel, Italy,
Japan, New Zealand, the Slovak Republic, Slovenia, Turkey, and the United States.
2. Data for Chilean SPEs are not available from 2005 to 2008. Data for Iceland's SPEs are available from 2013 onward.
3. Data for 2015 for Poland correspond to asset/liability figures, while data for earlier years correspond to directional figures.
Source: OECD calculations, OECD and IMF.
39
Figure 22. OECD FDI Regulatory Restrictiveness Index, 1997–2015
Notes: The OECD FDI Regulatory Restrictiveness Index gauges the restrictiveness of a country’s FDI rules across 22
economic sectors and across four types of restrictions: foreign equity restrictions; screening or approval mechanisms;
restrictions on key foreign employment; and operational restrictions to FDI. Restrictions are scored on a range from 0 (open) to
1 (closed). The Index covers only statutory measures discriminating against foreign investors. Other important aspects of an
investment climate (e.g. the implementation of regulations and state monopolies among other) are not considered. Country
coverage expands over time. In 1997, there were 44 economies covered. In 2015, all 34 OECD countries and 25 non-OECD
countries are covered, including all G20 members. Data reflects regulatory restrictions as of December each year. The increase
in average scores observed for the entire sample of countries in 2012 and 2013 are mainly due to the addition of new countries
(4 countries in 2012 and 1 country in 2013) for which historical scores have not been compiled.
Source: OECD FDI Regulatory Restrictiveness Index database.
0.00
0.05
0.10
0.15
0.20
0.25
1997 2003 2006 2010 2011 2012 2013 2014 2015
Average OECD Average G20 All countries
OECDFDIRegulatory RestrictivenessIndex (open=0;closed=1)
Pace of liberalising regulatory restrictions on FDI has slowed in recent years
Foreign direct investment (FDI) is a key element in international economic integration. From a broad
perspective, countries have significantly liberalised restrictions on international investment over time,
albeit at a slower pace more recently. Yet, there still remains significant variation across countries in
terms of statutory restrictions on FDI and, worldwide, many service sectors remain partly off limits to
foreign investors, holding back potential economy-wide productivity gains. In more recent periods, a
few countries have also become more sensitive to investment in primary sectors, and have tightened
the regime for foreign investors in these sectors (notably agriculture and mining and quarrying).
40
Table 23. OECD FDI Regulatory Restrictiveness Index, OECD countries per sector, 2015
Countries
Total
FDI
Index
Primary Manufacturing Electricity Distribution Transport Media Communications
Financial
services
Business
services
Real estate
investment
Australia 0.14 0.14 0.08 0.08 0.08 0.26 0.20 0.40 0.13 0.08 0.40
Austria 0.11 0.15 1.00 0.18 0.00 0.32 0.20
Belgium 0.04 0.04 0.02 0.02 0.02 0.11 0.02 0.02 0.02 0.25 0.02
Canada 0.17 0.19 0.10 0.10 0.10 0.27 0.71 0.57 0.07 0.10 0.01
Chile 0.06 0.15 0.41 0.19 0.02 0.01
Czech
Republic
0.01 0.03 0.08 0.01 0.02
Denmark 0.03 0.06 0.08 0.00 0.36 0.05
Estonia 0.02 0.02 0.15 0.00 0.15
Finland 0.02 0.02 0.01 0.08 0.01 0.09 0.01 0.01 0.01 0.05
France 0.05 0.16 0.15 0.05 0.05 0.00
Germany 0.02 0.07 0.20 0.03 0.01
Greece 0.03 0.08 0.15 0.11 0.02 0.06
Hungary 0.03 0.17 0.01 0.45
Iceland 0.17 0.24 0.11 0.56 0.11 0.20 0.11 0.11 0.12 0.11 0.24
Ireland 0.04 0.14 0.13 0.01 0.25
Israel 0.12 0.06 0.02 0.77 0.02 0.40 0.26 0.40 0.04 0.02 0.22
Italy 0.05 0.13 0.20 0.36 0.02
Japan 0.05 0.07 0.00 0.03 0.00 0.28 0.20 0.27 0.10
Korea 0.14 0.25 0.42 0.51 0.56 0.33 0.05
Luxembourg 0.00 0.08 0.00
Mexico 0.19 0.32 0.10 0.10 0.18 0.53 0.53 0.10 0.13 0.10 0.17
Netherlands 0.02 0.06 0.08 0.00
New Zealand 0.24 0.33 0.20 0.20 0.20 0.28 0.20 0.40 0.23 0.20 0.20
Norway 0.09 0.16 0.35 0.13 0.07 0.31 0.25
Poland 0.07 0.05 0.09 0.30 0.08 0.00 0.90
Portugal 0.01 0.01 0.08 0.02
Slovak
Republic
0.05 0.08 0.00 1.00
Slovenia 0.01 0.15 0.00 0.01
Spain 0.02 0.01 0.08 0.23 0.00 0.11
Sweden 0.06 0.14 0.29 0.20 0.20 0.00 0.05
Switzerland 0.08 0.50 0.25 0.47 0.07 0.40
Turkey 0.06 0.01 0.38 0.20 0.13 0.55
United
Kingdom
0.06 0.16 0.02 0.02 0.02 0.11 0.25 0.02 0.02 0.02
United States 0.09 0.18 0.20 0.55 0.25 0.11 0.04
OECD 0.07 0.10 0.02 0.12 0.02 0.22 0.16 0.09 0.03 0.07 0.16
Source: OECD FDI Regulatory Restrictiveness Index database.
41
Table 24. OECD FDI Regulatory Restrictiveness Index, Non-OECD countries per sector, 2015
Countries
Total
FDI
Index
Primary Manufacturing Electricity Distribution Transport Media Communications
Financial
services
Business
services
Real estate
investment
Argentina 0.04 0.08 0.04 0.50
Brazil 0.10 0.19 0.03 0.03 0.03 0.28 0.55 0.03 0.11 0.03 0.03
China 0.39 0.44 0.20 0.48 0.21 0.55 1.00 0.75 0.51 0.33 0.18
Colombia 0.03 0.04 0.05 0.12 0.21 0.02
Costa Rica 0.05 0.10 0.12 0.33 0.05 0.05 0.03
Egypt 0.06 0.33 0.02 0.10 0.33
India 0.24 0.32 0.05 0.06 0.23 0.16 0.31 0.18 0.30 0.56 1.00
Indonesia 0.34 0.43 0.07 0.10 0.56 0.41 0.89 0.29 0.24 0.58 1.00
Jordan 0.30 0.16 0.10 0.10 0.62 0.75 0.46 0.10 0.23 0.41 0.85
Kazakhstan 0.14 0.23 0.05 0.05 0.05 0.33 0.55 0.40 0.10 0.05 0.05
Kyrgyzstan 0.08 0.06 0.04 0.04 0.04 0.22 0.04 0.04 0.04 0.04 0.24
Latvia 0.03 0.03 0.01 0.01 0.01 0.08 0.01 0.01 0.01 0.01 0.23
Lithuania 0.03 0.07 0.01 0.01 0.01 0.28 0.01 0.01 0.01 0.01 0.11
Malaysia 0.21 0.25 0.50 0.44 0.10 0.65 0.25 0.20 0.09 0.30
Mongolia 0.10 0.13 0.09 0.09 0.09 0.20 0.09 0.09 0.09 0.09 0.09
Morocco 0.07 0.17 0.27 0.03 0.03 0.40
Myanmar 0.37 0.40 0.31 0.14 0.21 0.38 0.64 0.11 0.68 0.21 0.46
Peru 0.08 0.05 0.05 0.05 0.05 0.43 0.30 0.05 0.05 0.05
Philippines 0.41 0.66 0.07 0.50 0.28 0.67 0.96 0.67 0.11 1.00 0.53
Romania 0.01 0.17 0.00
Russia 0.18 0.16 0.10 0.03 0.05 0.35 0.35 0.10 0.43 0.18 0.33
Saudi
Arabia
0.37 0.61 0.21 0.21 0.25 0.45 0.61 0.30 0.27 0.30 1.00
South
Africa
0.06 0.01 0.01 0.01 0.01 0.19 0.30 0.01 0.05 0.26 0.06
Tunisia 0.21 0.21 0.04 0.03 0.63 0.27 0.09 0.20 0.24 0.22 0.20
Ukraine 0.12 0.13 0.08 0.06 0.08 0.26 0.27 0.08 0.08 0.08 0.41
Notes: The OECD FDI Regulatory Restrictiveness Index covers only statutory measures discriminating against foreign investors (e.g. foreign
equity limits, screening & approval procedures, restriction on key foreign personnel, and other operational measures). Other important aspects of
an investment climate (e.g. the implementation of regulations and state monopolies among other) are not considered. All 34 OECD countries and
25 non-OECD countries are covered, including all G20 members. Data of December 2015.
Source: OECD FDI Regulatory Restrictiveness Index database.
42
Figure 23. Inward FDI positions by major ultimate partners versus immediate partners
As a share of total inward FDI position*, at end 2014 or latest available year
Notes:* For 7 OECD countries which report FDI by ultimate investing country and FDI by immediate partner country to the
OECD: Czech Republic, France, Germany, Iceland, Italy, Poland and the United States. Austria report inward FDI by UIC to
the OECD but the data are excluded from the analysis because inward FDI by immediate counterparty is not publishable.
Source: OECD Foreign Direct Investment statistics database.
0%
4%
8%
12%
16%
Investing country
By Ultimate counterpart By Immediate counterpart
Shifting view of the origin of FDI: Investors hold investments indirectly through Luxembourg
and the Netherlands
Standard FDI statistics are presented according to the immediate investing country but presenting the
statistics according to the country of the ultimate investor better captures where the investment in a
country is coming from. These statistics show the country of the direct investor who ultimately
controls the investment and, thus, bears the risks and reaps the rewards of the investment. These
statistics reveal substantial differences in the distribution of inward positions by partner country. The
United States, Germany, and the United Kingdom are generally found to be more important investors
than the standard FDI statistics show while Luxembourg and the Netherlands are generally found to
be much less important. This indicates that investors from the United States, Germany, and the United
Kingdom—as well as other countries—hold their investments in other countries indirectly through
Luxembourg and the Netherlands.
43
Table 25. Inward FDI positions by Immediate (IMD) versus Ultimate (ULT) partner country*,
at end 2014 or latest available year
Immediate counterpart Ultimate counterpart
Total inward FDI position 5,332.7 100.0% 5,332.7 100.0%
Of which from: 0.0 0.0
United Kingdom 662.4 12.4% 718.2 13.5%
Germany 380.5 7.1% 535.9 10.1%
United States 186.4 3.5% 518.8 9.7%
Japan 418.8 7.9% 444.2 8.3%
France 390.3 7.3% 432.4 8.1%
The Netherlands 786.0 14.7% 375.6 7.0%
Switzerland 405.1 7.6% 333.1 6.2%
Canada 267.2 5.0% 317.2 5.9%
Luxembourg 672.0 12.6% 228.9 4.3%
Ireland 31.9 0.6% 173.9 3.3%
Italy 103.3 1.9% 140.4 2.6%
Belgium 208.6 3.9% 115.4 2.2%
Spain 125.6 2.4% 113.2 2.1%
Sweden 73.0 1.4% 79.2 1.5%
Australia 51.9 1.0% 61.0 1.1%
Austria 75.2 1.4% 53.0 1.0%
Korea 44.5 0.8% 43.9 0.8%
Norway 24.2 0.5% 39.8 0.7%
Denmark 44.8 0.8% 35.4 0.7%
United Arab Emirates 9.9 0.2% 33.3 0.6%
Mexico 18.0 0.3% 32.7 0.6%
Israel 11.3 0.2% 32.6 0.6%
Bermuda -0.3 26.0 0.5%
Finland 18.4 0.3% 25.9 0.5%
Brazil 0.6 0.0% 23.6 0.4%
Hong Kong (China) 10.4 0.2% 23.1 0.4%
Singapore 24.4 0.5% 22.7 0.4%
Russian Federation 11.8 0.2% 19.7 0.4%
Czech Republic 3.2 0.1% 19.4 0.4%
China 13.6 0.3% 16.6 0.3%
India 8.5 0.2% 15.5 0.3%
Saudi Arabia 0.8 0.0% 15.0 0.3%
Chinese Taipei 5.9 0.1% 11.4 0.2%
Poland 1.1 0.0% 10.6 0.2%
Table 26. Inward FDI positions by Immediate (IMD) versus Ultimate (ULT) partner country
for selected OECD countries*, at end 2014 or latest available year
Inward FDI positions from:
TotalWorld
United
Kingdom
Germany
United
States
Japan
France
The
Netherlands
Switzerland
Canada
Luxembourg
Ireland
Czech Republic IMD 122 3 16 5 1 7 31 5 0 15 0
ULT 122 5 32 9 2 7 6 3 0 4 0
France IMD 797 85 80 84 15 0 122 75 4 141 2
ULT 797 98 97 158 16 31 52 82 3 82 8
Germany IMD 957 80 0 86 26 74 226 78 1 173 11
ULT 957 132 33 208 41 70 95 71 c 79 3
Iceland** IMD 8 0 0 -3 0 0 1 0 0 7 0
ULT 8 1 0 5 0 0 0 0 0 0 0
Italy IMD 340 39 27 7 3 62 65 17 0 69 0
ULT 340 5 25 38 7 61 21 21 1 30 1
Poland IMD 209 7 34 8 1 24 36 5 0 25 2
ULT 209 12 36 21 4 23 17 4 2 11 2
United States IMD 2901 449 224 0 373 223 305 224 261 243 16
ULT 2901 466 313 80 375 240 185 152 311 24 160
Notes: All data are expressed in US dollar billion. c: confidential. *For 7 OECD countries which report FDI by Ultimate investing
country and FDI by immediate partner country to the OECD: Czech Republic, France, Germany, Iceland, Italy, Poland and the United
States. Austria report inward FDI by UIC to the OECD but the data are excluded from the analysis because inward FDI by immediate
counterparty is not publishable. ** Data exclude resident Special Purpose Entities (SPEs). Data for France and Germany in Table 26
correspond to FDI positons at-end 2013. Data are updated as of April 2016.
Source: OECD Foreign Direct Investment statistics database.
44
Figure 24. Domestic and Cross-Border M&A deals, 1997–2015
Source: Dealogic M&A Analytics database.
0
1000
2000
3000
4000
5000
6000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USDbln
Domesticandcross borderM&As
Domestic M&A Cross border M&A
0
20
40
60
80
100
120
140
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USDmln
Average dealsize
0%
5%
10%
15%
20%
25%
30%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Share of EMEs intotalglobal M&As
Global trends in mergers and acquisitions
In 2015 the global value of mergers and acquisitions (M&A) reached USD 4.2 trillion. This was an
increase by 32% compared to 2014 and one of the highest levels in the last 15 years. In general, the
annual average value of M&A during the period 2008-2015 exceeded the annual average value of
M&A during the period 2000-2007. In 2015, the average deal size exceeded USD 100m for the first
time since 2007. Despite the fact that emerging market economies in recent years have experienced
declines in capital inflows, their share of global M&A activity reached 27% in 2015, which is the
highest share on record.
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard
2016 OECD Business and Finance Scoreboard

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2016 OECD Business and Finance Scoreboard

  • 3. OECD Business and Finance Scoreboard 2016
  • 4. This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. © OECD 2016
  • 5. 3 ABOUT THE OECD BUSINESS AND FINANCE SCOREBOARD The OECD Business and Finance Scoreboard accompanies the OECD Business and Finance Outlook by providing a commented overview of selected indicators and data related to corporate performance, banking, capital markets, pensions and investments. While some of the indicators and developments are subject to in-depth analysis in the Outlook, others appear only in the Scoreboard, giving the reader complementary information and additional opportunities for analysis. The Scoreboard makes use of data that is collected directly by the OECD as well as calculations that are based on information available in different external databases. A detailed description of the methodology for data collection and analysis is provided in the annex. The indicators and data that feature in this edition of the Scoreboard, primarily reflect the focus of the 2015 and 2016 OECD Business and Finance Outlooks. Going forward, the objective is to establish a useful balance between relevant standardised indicators to be tracked over time and quantitative information that primarily is tailored to support the policy themes that will be addressed in subsequent editions of the Business and Finance Outlook.
  • 6. 4
  • 7. 5 Table of contents About the OECD Business and Finance Scoreboard................................................................. 3 Acronyms and abbreviations ..................................................................................................... 8 Editorial ..................................................................................................................................... 9 Global trends in productivity................................................................................................... 11 Declining investment opportunities......................................................................................... 12 Greater capital expenditure in emerging economies................................................................ 14 A global surge in corporate bond issues .................................................................................. 16 The maturity divergence.......................................................................................................... 17 An increase in emerging market use of public equity markets................................................ 18 A decline in initial public offerings by small companies ........................................................ 19 Public equity markets remain an important source of continuous financing........................... 20 New industrial sectors using corporate bonds ......................................................................... 21 Sectoral trends in the use of public equity markets ................................................................. 22 A decline in overall corporate bond ratings............................................................................. 23 The decline in corporate bond covenant protection................................................................. 24 Distance-to-default has fallen.................................................................................................. 26 A measure of the value of implicit guarantees for the debt of large banks.............................. 27 Bank beta indicator.................................................................................................................. 28 Pension funds’ investments fell slightly in 2015 relatively to 2014........................................ 30 The low returns in 2015 mostly explain the fall in pension funds’ investments ..................... 31 Negative returns in stock markets may be behind the weak performance of pension funds’ investments in 2015.............................................................................. 32 Global trends in FDI flows ...................................................................................................... 33 Equity capital FDI flows surged in 2015................................................................................. 34 Capital passing through Special Purpose Entities (SPEs) dropped significantly in 2014 and 2015............................................................................................................... 36 Pace of liberalising regulatory restrictions on FDI has slowed in recent years ....................... 39 Shifting view of the origin of FDI: Investors hold investments indirectly through Luxembourg and the Netherlands..................................................................................... 42 Global trends in mergers and acquisitions............................................................................... 44 Openness of banking systems.................................................................................................. 46 Saving-investment correlation................................................................................................. 48 ANNEX: Methodology for data collection and analysis......................................................... 49
  • 8. 6 Figures Figure 1. Productivity measures for listed non-financial companies, 2002–2015 .................................11 Figure 2. Return on equity, cost of equity and cost of capital, 2002–2015............................................12 Figure 3. Listed non-financial company corporate finance data, 2002–2015 ........................................14 Figure 4. Outstanding stock of non-financial corporate bonds, 2000–2015 ..........................................16 Figure 5. Average maturities for corporate bonds issued by non-financial companies, 2000– 2015 ........................................................................................................................................17 Figure 6. Initial public offerings (IPOs), 2000–2015.............................................................................18 Figure 7. Small non-financial company IPOs in advanced economies, 1994–2015 ..............................19 Figure 8. Secondary public offerings in advanced and emerging economies, 2000–2015 ....................20 Figure 9. Corporate bond issuance by companies in energy, industrials and materials sectors, 2000–2015 ..............................................................................................................................21 Figure 10. Distribution of public equity financing among different sectors, 2000–2015 ......................22 Figure 11. Rating quality and new supply of corporate bonds, 2000–2015...........................................23 Figure 12. Covenant protection index for corporate bonds issued in the United States, 2000– 2014 ........................................................................................................................................24 Figure 13. Distance-to-default (DTD) of large listed banks, 1999–2016...............................................26 Figure 14. Credit rating uplifts for the debt of large banks, 2007–2015................................................27 Figure 15. Bank beta indicator for large listed banks, 1999–2016.........................................................28 Figure 16. Pension funds' real net investment rate of return in selected OECD countries, 2014–2015 ..............................................................................................................................31 Figure 17. Pension fund asset allocation in selected asset classes in selected OECD countries, 2015 ........................................................................................................................................32 Figure 18. Foreign direct investment inflows by region, 2005–2015 ....................................................33 Figure 19. Foreign direct investment by instruments, 2005–2015.........................................................34 Figure 20. Total FDI outflows from selected OECD countries with resident SPEs, 2005.....................36 Figure 21. Total FDI inflows to selected OECD countries with resident SPEs, 2005–2015 .................36 Figure 22. OECD FDI Regulatory Restrictiveness Index, 1997–2015 ..................................................39 Figure 23. Inward FDI positions by major ultimate partners versus immediate partners ......................42 Figure 24. Domestic and Cross-Border M&A deals, 1997–2015 ..........................................................44 Figure 25. Deviations from covered interest parity (CIP) on domestic forward (DF) and non- deliverable forward (NDF) markets, 2015..............................................................................46 Figure 26. Saving-investment correlation, 1981–2015 ..........................................................................48
  • 9. 7 Tables Table 1. Average value added and net sales data for listed companies, 2002–2015..............................11 Table 2. Average return on equity, cost of capital and debt data for listed companies, 2002– 2015........................................................................................................................................13 Table 3. Key financial data for non-financial listed companies, 2002–2015.........................................15 Table 4. Outstanding stock of corporate bonds, 2000–2015..................................................................16 Table 5. Average maturities for corporate bonds, 2000–2015...............................................................17 Table 6. Initial public offerings, 2000–2015..........................................................................................18 Table 7. Small non-financial company IPOs in advanced and emerging economies ............................19 Table 8. Secondary public offerings, 2000–2015 ..................................................................................20 Table 9. Distribution of corporate bond issuance among different sectors, 2000–2015........................21 Table 10. Distribution of public equity financing among different sectors, 2000–2015 .......................22 Table 11. Distribution of corporate bond issuance among rating categories, 2000–2015.....................23 Table 12. Frequency of different types of corporate bond covenants, 2000–2014................................25 Table 13. Average distance-to-default (DTD) of large listed banks, 2003–2016..................................26 Table 14. Average beta calculated using MSCI regional equity indices for large listed banks, 2003–2016..............................................................................................................................28 Table 15. Average beta calculated using MSCI global equity index for large listed banks, 2003–2016..............................................................................................................................29 Table 16. Total investment of pension funds and all retirement vehicles, 2015....................................30 Table 17. Pension funds' real net rate of investment returns in selected OECD countries, 2005–2015..............................................................................................................................31 Table 18. FDI inflows by selected regions, 2005–2015.........................................................................33 Table 19. FDI outflows by selected regions, 2005–2015.......................................................................33 Table 20. FDI inflows and outflows by instrument for selected regions, 2005–2015 ...........................35 Table 21. FDI outflows for countries with SPEs, 2005–2015 ...............................................................37 Table 22. FDI inflows for countries with SPEs, 2005–2015 .................................................................38 Table 23. OECD FDI Regulatory Restrictiveness Index, OECD countries per sector, 2015 ................40 Table 24. OECD FDI Regulatory Restrictiveness Index, Non-OECD countries per sector, 2015........................................................................................................................................41 Table 25. Inward FDI positions by Immediate (IMD) versus Ultimate (ULT) partner country............43 Table 26. Inward FDI positions by Immediate (IMD) versus Ultimate (ULT) partner country for selected OECD countries..................................................................................................43 Table 27. Domestic and Cross-Border M&A deals, 1997–2015 ...........................................................45 Table 28. Deviations from covered interest parity (CIP) on domestic forward (DF) markets, 2006–2015..............................................................................................................................47 Table 29. Deviations from covered interest parity (CIP) on non-deliverable forward (NDF) markets, 2006–2015 ...............................................................................................................47 Table 30. Saving-investment correlation by region, 1986–2015 ...........................................................48
  • 10. 8 Acronyms and abbreviations BRICS Brazil, Russia, India, China, and South Africa BRIICS Brazil, Russia, India, Indonesia, China, and South Africa CAPEX company capital expenditure CIP covered interest parity COD cost of debt COE cost of equity COK cost of capital DF domestic forward DTD distance-to-default EBITDA earnings before interest, taxes, depreciation and amortisation EME emerging market economy FDI foreign direct investment GARCH Generalized Auto Regressive Conditional Heteroskedasticity GICS Global Industry Classification Standard IG investment grade IPO initial public offering M&A mergers and acquisitions MSCI Morgan Stanley Composite Index NDF non-deliverable forward OECD Organisation for Economic Co-operation and Development R&D research and development REIT real estate investment trusts ROE return on equity SPEs special purpose entities SPO secondary public offering (follow-on offering)
  • 11. 9 Editorial Despite the fact that the interest rates have been kept at record lows since the financial crisis, the world economy is still beset with major headwinds. As a consequence, there is little doubt that the journey towards economic recovery increasingly has to rely on structural adjustments. Of particular importance is the ability of the corporate sector to adjust to the reversal of the commodity supercycle through a combination of orderly creative destruction and corporate strategies that promote productive investments. From a policy perspective, these challenges call for a better understanding of the relationships between business behaviour and macroeconomic conditions. Notably, how monetary regimes and regulatory reforms influence the decisions of both investors and corporations to focus on long term value creation. This Scoreboard provides indicators that will help policy makers to monitor changes in business behaviour that influence firm level performance and productivity. This includes indicators of how they use productivity enhancing strategies such as research and development, cash flow management and corporate restructuring. It also contains indicators of how, and to what extent, corporations use market based finance, such as equity and corporate bonds. One important indicator of how effectively corporations use the capital that they have at their disposal is the return-on-equity. Building on a global sample of about 11.000 large listed companies, the Scoreboard shows that return-on-equity minus the cost-of-equity has fallen. In the last couple of years it has even been negative in emerging markets, which indicates the existence of excess capacity and the need for structural adjustments. Access to equity capital is essential for long term investments, such as innovation and product development; particularly for smaller growth companies. However, the amount of new equity capital that corporations raised through initial public offerings (IPOs) declined in 2015. And while the number of IPOs by growth companies in advanced economies slightly increased, the total amount of new equity capital that they raised actually declined and remains at a low level. Considering the consistently low level of growth company IPOs in the last decade, more can probably be done to increase their access to public equity markets. Bonds have become an increasingly important source of finance for corporations worldwide and the stock of outstanding corporate bonds continued to increase in 2015. At the same time, the overall rating quality of corporate bonds remains considerably lower than before the 2008 financial crisis. This is mainly an effect of the high share of non-investment grade bonds and B-grade bonds being issued. The covenant protection index for non-investment grade corporate bonds also remains at a low level, indicating that investors in their search for yield are still willing to forego certain governance rights.
  • 12. 10 Analysis of firm level data in the OECD Business and Finance Outlook suggests that some companies with high productivity growth may use mergers and acquisitions to rationalise their businesses in a more competitive environment. Globally, the volume of corporate mergers and acquisitions grew by almost one third in 2015. The surge was fuelled mainly by domestic mergers and acquisitions in advanced economies, who account for almost three quarters of the value of all mergers and acquisitions. To develop their business, corporations may also take advantage of entering and expanding in overseas markets. While the global flow of foreign direct investments has remained fairly stable since the financial crisis, 2015 saw an increase of about 25%. This increase was fuelled mainly by an increased inflow to the European Union and the United States, while the People’s Republic of China experienced a small decrease in inward foreign direct investments. The OECD Business and Finance Outlook 2016 underlines the need to address the links between the regulatory framework, the macroeconomic environment and business behaviour. By innovative use of micro level data, this Scoreboard contributes to this effort and the shaping of coherent policies that will support productivity, sustainable growth and better lives for all. Adrian Blundell-Wignall Special Advisor to the Secretary-General on Financial Markets Director for Financial and Enterprise Affairs, OECD
  • 13. 11 Figure 1. Productivity measures for listed non-financial companies, 2002–2015 Table 1. Average value added and net sales data for listed companies, 2002–2015 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Value added per capita United States 0.20 0.20 0.21 0.20 0.20 0.20 0.21 0.20 0.22 0.23 0.23 0.23 0.23 0.22 Europe 0.07 0.08 0.09 0.09 0.10 0.11 0.12 0.10 0.10 0.11 0.10 0.10 0.09 0.08 Japan 0.00 0.00 0.00 0.01 0.05 0.05 0.05 0.05 0.06 0.06 0.06 0.05 0.05 0.05 Australia & New Zealand 0.05 0.06 0.10 0.12 0.17 0.17 0.13 0.17 0.19 0.19 0.17 0.17 0.15 0.14 BRIICS 0.02 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.05 0.06 0.05 0.06 0.05 0.05 Other Asia 0.04 0.06 0.07 0.07 0.06 0.10 0.09 0.06 0.08 0.07 0.07 0.08 0.09 0.09 Other EMEs 0.03 0.03 0.04 0.04 0.04 0.04 0.06 0.05 0.06 0.06 0.06 0.06 0.06 0.06 Advanced Economies 0.11 0.11 0.12 0.12 0.13 0.13 0.13 0.12 0.13 0.14 0.14 0.14 0.13 0.12 Emerging Economies 0.03 0.03 0.04 0.04 0.04 0.06 0.06 0.05 0.06 0.07 0.06 0.07 0.06 0.06 Net sales per capita United States 0.27 0.29 0.31 0.32 0.34 0.36 0.39 0.36 0.39 0.42 0.41 0.40 0.40 0.38 Europe 0.22 0.25 0.27 0.29 0.31 0.35 0.37 0.32 0.33 0.36 0.35 0.35 0.34 0.29 Japan 0.37 0.40 0.43 0.42 0.41 0.43 0.45 0.43 0.48 0.51 0.50 0.44 0.41 0.41 Australia & New Zealand 0.20 0.24 0.31 0.36 0.38 0.41 0.38 0.39 0.49 0.51 0.50 0.47 0.45 0.42 BRIICS 0.10 0.11 0.13 0.15 0.18 0.20 0.22 0.20 0.24 0.28 0.27 0.28 0.27 0.25 Other Asia 0.29 0.31 0.33 0.31 0.30 0.29 0.32 0.26 0.29 0.29 0.29 0.41 0.42 0.39 Other EMEs 0.17 0.15 0.18 0.20 0.22 0.25 0.30 0.24 0.26 0.29 0.29 0.29 0.27 0.24 Advanced Economies 0.27 0.29 0.31 0.32 0.33 0.36 0.38 0.34 0.37 0.40 0.38 0.37 0.36 0.34 Emerging Economies 0.16 0.15 0.18 0.20 0.22 0.25 0.27 0.23 0.27 0.31 0.30 0.33 0.32 0.29 Note: All data are expressed in US dollar billion per one thousand employees. Europe refers to the European Union, Norway and Switzerland. BRIICS refers to Brazil, Russia, India, Indonesia, China and South Africa. Other Asia refers to Hong Kong (China), Singapore, Korea and Chinese Taipei. Value added: sum of personnel expenses and EBITDA (i.e. income before interest, taxes, depreciation and amortisation). Net sales: total operating revenues less various adjustments to gross sales. Source: OECD calculations, Bloomberg. See Annex for details. 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 USDbln /1000 employees USDbln /1000 employees Advanced economies 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 USDbln /1000 employees USDbln /1000 employees Emergingeconomies Value added Netsales (RHS) Global trends in productivity In recent years, productivity measured both as company value-added (wages plus EBITDA) per employee and net sales per employee have declined. While net sales per employee in emerging economies, as a result their increased participation in global value chains, has caught up with levels in advanced economies, it has not allowed for a similar catch up with respect to productivity measured as value added per employee.
  • 14. 12 Figure 2. Return on equity, cost of equity and cost of capital, 2002–2015 Source: Bloomberg, OECD calculations. See Annex for details. 0.00 0.50 1.00 1.50 2.00 2.50 3.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Ratio Debt-to-equity ratio Advanced economies Emerging economies -2 0 2 4 6 8 10 12 % Advanced economies Dividend & Buybacks ROE - COE ROE - COK -10 -5 0 5 10 % Emergingeconomies Dividend & Buybacks ROE - COE ROE - COK Declining investment opportunities In emerging economies both the return on equity (ROE) minus the cost-of-equity and the ROE minus cost-of-capital are today negative. This is consistent with other evidence that these economies exhibit excess capacity in important sectors resulting from overinvestment. With a decrease in investment opportunities, dividends and buybacks have been rising in advanced economies since the 2008 financial crisis. Debt financing is still greater in advanced economies but emerging economies are catching up.
  • 15. 13 Table 2. Average return on equity, cost of capital and debt data for listed companies, 2002–2015 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Debt to equity ratio United States 3.13 2.92 2.74 2.65 2.65 2.68 2.90 2.76 2.64 2.72 2.75 2.69 2.87 2.95 Europe 3.28 3.19 3.14 3.06 3.02 3.02 3.29 3.14 2.91 2.95 3.01 2.92 3.06 3.04 Japan 3.24 3.02 2.86 2.67 2.62 2.60 2.72 2.64 2.62 2.66 2.62 2.55 2.48 2.48 Australia & New Zealand 2.29 2.19 2.41 2.33 2.28 2.45 2.29 2.05 1.97 2.09 2.12 2.05 2.11 2.13 BRIICS 1.95 1.99 1.99 1.99 2.03 2.06 2.19 2.19 2.20 2.28 2.35 2.42 2.55 2.55 Other Asia 2.41 2.29 2.25 2.26 2.27 2.29 2.44 2.33 2.19 2.24 2.33 2.60 2.55 2.60 Other EMEs 2.17 2.09 2.03 2.00 2.08 2.06 2.23 2.24 2.22 2.27 2.25 2.25 2.37 2.41 Advanced Economies 3.12 2.96 2.85 2.74 2.71 2.72 2.92 2.78 2.65 2.70 2.73 2.71 2.81 2.84 Emerging Economies 2.25 2.19 2.15 2.11 2.15 2.16 2.32 2.28 2.24 2.31 2.37 2.39 2.49 2.50 ROE minus COE (%) United States -1.15 7.55 8.97 10.12 10.88 10.04 1.59 4.64 7.77 7.82 4.83 6.09 4.46 0.84 Europe -3.17 3.30 9.47 10.11 10.94 11.78 5.53 1.86 6.18 5.02 2.60 4.62 4.30 1.95 Japan 1.39 3.45 5.39 5.93 5.72 4.36 -4.17 -0.65 1.76 -0.24 1.34 3.63 3.42 3.40 Australia & New Zealand 0.63 5.03 12.59 13.35 14.47 9.57 -3.00 1.06 5.07 -1.21 -3.99 -1.61 -7.22 -11.65 BRIICS 3.18 7.71 8.88 9.87 6.69 4.28 -1.19 -1.72 -0.89 -1.57 -6.01 -7.54 -11.33 -12.11 Other Asia 0.16 0.13 3.38 2.42 1.29 1.83 -5.28 -3.12 0.16 -2.98 -3.88 -3.01 -4.10 -5.05 Other EMEs 0.14 4.36 5.93 7.17 6.71 8.10 0.84 0.06 2.20 1.29 0.03 -0.84 -3.31 -5.38 Advanced Economies -1.16 4.96 8.18 8.78 9.50 8.99 1.29 1.86 5.38 4.12 2.31 3.81 2.90 0.11 Emerging Economies 1.71 5.32 7.10 8.09 5.85 4.94 -0.85 -1.40 0.05 -0.86 -4.27 -5.45 -8.57 -9.60 ROE minus COK (%) United States -0.45 8.16 9.74 10.89 11.44 11.36 5.14 7.09 10.36 11.52 9.48 10.06 9.46 6.14 Europe -1.75 4.46 10.63 11.21 11.86 12.75 8.80 4.81 9.14 8.63 6.59 7.69 8.00 5.80 Japan 2.53 4.68 7.20 7.54 7.48 6.40 -1.28 1.70 4.07 2.60 4.36 6.32 6.38 6.36 Australia & New Zealand 5.13 8.72 16.44 17.16 17.78 13.75 3.19 4.91 8.62 3.90 0.60 2.53 -2.28 -5.72 BRIICS 5.30 9.49 10.46 11.06 9.75 7.79 3.61 1.94 3.57 3.74 0.58 -0.73 -2.54 -3.82 Other Asia 3.95 4.31 7.27 6.05 4.91 6.25 1.41 1.75 5.19 3.36 2.44 3.02 3.15 2.92 Other EMEs 2.48 6.50 8.46 9.50 9.25 11.33 6.43 4.53 6.96 7.14 5.66 3.90 2.22 0.16 Advanced Economies 0.06 6.10 9.53 10.13 10.75 10.65 4.99 4.78 8.35 7.97 6.65 7.51 7.44 4.89 Emerging Economies 4.46 7.78 9.49 9.92 8.85 8.41 4.26 2.51 4.51 4.51 1.96 0.64 -1.04 -2.24 Dividend & Buybacks (% of net sales) United States 2.66 2.61 3.60 4.66 5.23 5.82 4.28 2.88 3.65 4.53 4.52 5.07 5.82 6.06 Europe 1.84 1.56 2.85 3.58 4.27 4.07 3.84 2.64 2.71 3.18 2.86 3.32 3.26 3.33 Japan 1.09 0.75 0.79 0.94 1.17 1.53 1.70 0.64 0.85 1.17 1.22 0.99 1.41 1.41 Australia & New Zealand 2.71 4.05 5.27 5.62 7.01 5.04 3.52 1.90 5.19 4.36 4.81 3.95 4.39 4.89 BRIICS 1.76 1.95 1.22 1.70 2.13 0.82 1.08 0.97 0.87 2.21 2.37 1.99 1.44 0.93 Other Asia 2.09 2.39 2.84 2.84 3.03 2.62 3.15 1.79 1.97 2.48 1.77 1.33 1.38 1.76 Other EMEs 1.99 2.16 3.37 3.22 4.22 4.95 5.17 4.00 4.26 4.37 3.47 3.91 4.08 3.89 Advanced Economies 1.96 1.83 2.70 3.49 4.07 4.22 3.65 2.25 2.74 3.29 3.17 3.51 3.88 4.06 Emerging Economies 1.91 1.92 1.95 2.09 2.52 1.89 2.01 1.59 1.50 2.45 2.38 2.04 1.71 1.40 Note: Europe refers to the European Union, Norway and Switzerland. BRIICS refers to Brazil, Russia, India, Indonesia, China and South Africa. Other Asia refers to Hong Kong (China), Singapore, Korea and Chinese Taipei. Dividend and buybacks ratios are expressed in percent of net sales. Debt to capital ratio: ratio of debt to the sum of debt plus equity. ROE (return on equity): ratio of net income to common equity. COE (cost of equity): sum of dividend and buyback yield and underlying trend in EPS growth. COK (cost of capital): weighted average (by the share of equity and debt in total assets, respectively) sum of cost of equity and cost of debt. Source: Bloomberg, OECD calculations. See Annex for details.
  • 16. 14 Figure 3. Listed non-financial company corporate finance data, 2002–2015 Source: Bloomberg, OECD calculations. See Annex for details. 0 2 4 6 8 10 12 14 0 1 2 3 4 5 6 7 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % of net sales% of net sales Advanced economies Free cashflow R&D expenditure M&A deal value Capital expenditure (RHS) 0 2 4 6 8 10 12 14 0 1 2 3 4 5 6 7 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % of net sales % of net sales Emergingeconomies Greater capital expenditure in emerging economies Companies in emerging economies invest much more as a percentage of net sales than companies in advanced economies. However, advanced economies are benefitting from efficacy of three corporate strategies that boost their productivity: higher research and development; higher free cash flow, and; more mergers and acquisition activities to rationalise business models.
  • 17. 15 Table 3. Key financial data for non-financial listed companies, 2002–2015 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Capital expenditure United States 6.13 5.29 5.48 5.68 6.43 6.63 6.70 5.79 5.87 6.39 7.06 6.98 7.39 7.20 Europe 6.86 6.09 6.34 6.52 6.82 6.97 7.13 6.96 6.37 6.38 6.44 6.43 6.36 6.54 Japan 5.68 5.29 5.53 5.84 5.56 5.65 5.92 4.97 4.58 4.86 5.30 5.06 5.00 5.00 Australia & New Zealand 10.04 8.75 9.58 10.70 11.06 10.58 12.36 11.21 10.20 13.86 14.72 12.06 10.56 10.88 BRIICS 11.87 11.87 11.37 11.55 12.10 13.36 13.69 13.22 11.97 11.48 11.12 10.52 9.58 9.84 Other Asia 8.19 8.69 9.58 9.23 9.16 8.55 8.08 8.27 8.23 7.87 7.48 7.35 7.16 7.93 Other EMEs 9.98 9.11 8.25 10.13 10.55 10.97 10.98 10.95 9.15 8.76 9.24 9.95 10.48 11.28 Advanced Economies 6.51 5.81 6.11 6.36 6.73 6.93 7.09 6.47 6.22 6.59 7.02 6.89 6.99 6.91 Emerging Economies 9.83 10.20 9.78 10.54 11.12 11.90 12.16 11.91 10.80 10.43 10.22 9.77 9.18 9.61 Free cash flow United States 5.53 6.39 6.51 6.04 5.31 5.41 4.58 6.62 6.32 6.12 5.40 5.90 5.38 6.15 Europe 3.47 4.70 6.10 5.60 5.24 5.08 3.48 5.89 5.32 3.90 3.90 3.79 4.08 4.48 Japan 3.09 4.09 3.18 2.38 2.71 2.43 0.62 4.73 4.28 1.99 2.14 3.24 3.43 3.43 Australia & New Zealand 6.24 7.57 7.30 6.72 8.09 6.74 6.55 5.79 4.61 3.80 4.63 5.65 6.28 5.71 BRIICS 4.02 4.49 3.08 2.78 2.56 0.75 -0.87 0.92 0.27 -1.18 -0.40 0.42 1.61 2.19 Other Asia 6.24 6.27 5.60 4.23 4.06 4.25 2.38 3.26 3.42 1.76 2.47 2.45 2.54 3.83 Other EMEs 4.97 7.97 8.56 6.94 7.14 6.62 4.18 7.34 6.97 5.14 5.19 4.58 4.75 4.27 Advanced Economies 4.25 5.29 5.57 5.11 4.81 4.69 3.47 5.81 5.37 4.26 4.02 4.45 4.41 4.94 Emerging Economies 4.69 5.42 5.03 3.77 3.60 2.46 0.30 2.36 1.79 0.20 0.89 1.25 2.06 2.65 R&D expenditure United States 2.22 2.18 2.02 1.94 2.03 1.97 1.91 2.06 2.02 2.07 2.12 2.16 2.26 2.54 Europe 2.06 2.03 2.12 1.97 2.08 2.05 1.79 1.97 1.88 1.81 1.86 1.87 2.02 2.16 Japan 2.63 2.61 2.58 2.56 2.45 2.43 2.63 2.60 2.50 2.48 2.44 2.22 2.28 2.28 Australia & New Zealand 0.24 0.21 0.21 0.21 0.26 0.29 0.31 0.25 0.23 0.22 0.24 0.26 0.25 0.27 BRIICS 0.28 0.27 0.26 0.27 0.30 0.31 0.35 0.43 0.48 0.56 0.63 0.72 0.87 1.00 Other Asia 1.27 1.67 1.80 1.85 1.87 1.97 1.86 1.82 1.83 2.01 2.11 1.71 1.73 1.81 Other EMEs 0.26 0.30 0.26 0.22 0.16 0.15 0.16 0.20 0.18 0.18 0.22 0.22 0.23 0.27 Advanced Economies 2.20 2.16 2.11 2.01 2.04 1.99 1.91 2.03 1.96 1.94 1.97 1.93 2.04 2.21 Emerging Economies 0.56 0.67 0.68 0.64 0.62 0.65 0.59 0.62 0.66 0.74 0.82 0.88 0.99 1.09 M&A deal value United States 4.00 2.75 2.48 3.64 6.60 4.84 3.36 3.57 2.70 2.82 3.02 2.01 4.03 5.25 Europe 2.49 1.50 1.58 2.60 3.66 4.92 3.05 2.40 2.00 2.28 1.29 1.19 2.06 2.87 Japan 0.84 0.33 0.75 0.81 1.99 1.10 1.62 0.95 1.01 1.21 1.11 1.64 0.92 0.94 Australia & New Zealand 2.74 2.66 3.02 2.94 3.10 6.10 2.26 0.57 4.42 5.46 1.53 1.06 2.11 2.25 BRIICS 0.90 1.48 1.86 1.74 1.63 2.77 1.52 1.68 1.63 1.10 0.74 1.16 0.99 2.66 Other Asia 1.20 0.89 1.06 1.06 1.64 3.00 0.86 0.97 1.81 1.00 1.01 0.69 1.70 2.04 Other EMEs 0.94 0.72 0.95 0.91 1.54 3.31 1.93 1.28 3.26 1.90 1.69 1.29 1.16 0.89 Advanced Economies 2.72 1.72 1.83 2.65 4.59 4.15 2.86 2.58 2.17 2.33 1.96 1.65 2.80 3.38 Emerging Economies 0.87 1.22 1.45 1.32 1.49 2.87 1.51 1.52 1.93 1.22 0.99 1.07 1.02 2.43 Note: All data are expressed in percent of net sales. Europe refers to the European Union, Norway and Switzerland. BRIICS refers to Brazil, Russia, India, Indonesia, China and South Africa. Other Asia refers to Hong Kong (China), Singapore, Korea and Chinese Taipei. Capital expenditure: amount the company spent on purchases of tangible fixed assets. Free cash flow: operating cash flow minus capital expenditures. R&D expenditure: operating expense related to the research and development of a company's products or services. M&A deal value: declared amount effectively paid by the acquirer for the target. Source: Bloomberg, OECD calculations. See Annex for details.
  • 18. 16 Figure 4. Outstanding stock of non-financial corporate bonds, 2000–2015 Table 4. Outstanding stock of corporate bonds, 2000–2015 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 World 7.7 8.5 8.9 9.7 10.6 11.4 12.9 14.3 14.9 15.8 16.7 17.5 18.8 19.9 20.9 21.8 Non-financial 3.5 4.0 4.3 4.5 4.7 4.8 5.1 5.5 5.8 6.8 7.5 8.1 9.0 9.9 10.4 11.0 Financial 4.2 4.4 4.6 5.2 5.9 6.6 7.8 8.8 9.1 9.0 9.2 9.4 9.8 10.0 10.5 10.7 Investment grade 7.0 7.7 8.0 8.8 9.6 10.3 11.7 13.0 13.7 14.5 15.1 15.8 16.8 17.6 18.4 19.1 Non-investment grade 0.8 0.8 0.8 0.9 1.0 1.1 1.2 1.3 1.2 1.3 1.6 1.7 2.0 2.3 2.6 2.7 Advanced economies 7.4 8.1 8.5 9.3 10.1 10.9 12.2 13.5 13.9 14.5 15.1 15.5 16.4 17.0 17.8 18.5 Non-financial 3.4 3.9 4.1 4.3 4.5 4.5 4.8 5.1 5.3 6.1 6.6 6.9 7.7 8.3 8.8 9.3 Financial 4.0 4.3 4.5 5.0 5.7 6.4 7.4 8.4 8.6 8.4 8.5 8.6 8.7 8.7 9.0 9.2 Investment grade 6.7 7.4 7.8 8.5 9.2 9.9 11.1 12.3 12.9 13.3 13.7 14.0 14.6 15.0 15.6 16.1 Non-investment grade 0.7 0.7 0.7 0.8 0.9 1.0 1.1 1.1 1.1 1.2 1.4 1.5 1.7 2.0 2.2 2.3 Emerging markets 0.3 0.3 0.3 0.4 0.4 0.5 0.7 0.9 1.0 1.3 1.6 2.0 2.4 2.9 3.1 3.3 Non-financial 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.4 0.5 0.7 0.9 1.1 1.3 1.6 1.6 1.7 Financial 0.2 0.2 0.2 0.2 0.2 0.2 0.4 0.5 0.5 0.6 0.7 0.9 1.1 1.3 1.5 1.6 Investment grade 0.2 0.2 0.3 0.3 0.3 0.4 0.6 0.7 0.8 1.1 1.4 1.8 2.2 2.6 2.7 2.9 Non-investment grade 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.4 0.4 United States 3.3 3.7 3.9 4.1 4.4 4.5 5.0 5.5 5.5 5.5 5.7 5.7 6.0 6.4 6.8 7.4 Non-financial 2.0 2.2 2.4 2.5 2.6 2.6 2.7 2.9 2.9 3.2 3.4 3.6 3.9 4.2 4.6 5.1 Financial 1.3 1.4 1.5 1.6 1.8 1.9 2.2 2.6 2.6 2.4 2.3 2.2 2.1 2.2 2.3 2.4 Investment grade 2.7 3.1 3.3 3.4 3.6 3.7 4.1 4.6 4.7 4.7 4.6 4.6 4.7 5.0 5.4 5.9 Non-investment grade 0.6 0.6 0.6 0.7 0.8 0.8 0.9 0.9 0.8 0.9 1.0 1.1 1.3 1.4 1.5 1.5 Europe 3.0 3.2 3.4 3.8 4.3 4.8 5.6 6.2 6.4 6.8 7.0 7.2 7.5 7.5 7.7 7.7 Non-financial 0.7 0.8 0.9 1.0 1.1 1.1 1.3 1.4 1.5 1.9 2.1 2.2 2.4 2.6 2.7 2.8 Financial 2.3 2.4 2.5 2.8 3.2 3.7 4.3 4.8 4.9 4.9 4.9 5.0 5.0 4.9 5.0 4.9 Investment grade 2.9 3.2 3.3 3.7 4.2 4.7 5.4 6.0 6.3 6.6 6.7 6.9 7.1 7.0 7.1 7.1 Non-investment grade 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.4 0.6 0.6 OECD 7.4 8.1 8.5 9.3 10.1 10.9 12.2 13.4 13.9 14.5 15.0 15.5 16.3 17.0 17.8 18.4 Non-financial 3.4 3.8 4.1 4.3 4.5 4.5 4.8 5.1 5.3 6.1 6.6 7.0 7.7 8.3 8.8 9.4 Financial 4.0 4.3 4.5 5.0 5.6 6.3 7.4 8.3 8.6 8.4 8.4 8.5 8.6 8.6 8.9 9.0 Investment grade 6.7 7.4 7.8 8.5 9.2 9.9 11.1 12.3 12.8 13.3 13.6 14.0 14.6 15.0 15.6 16.1 Non-investment grade 0.7 0.7 0.8 0.8 0.9 1.0 1.1 1.1 1.1 1.2 1.4 1.5 1.7 2.0 2.2 2.4 Note: All data are expressed in US dollar trillion. Source: Thomson Reuters, Bloomberg, OECD calculations. See Annex for details. A global surge in corporate bond issues Since 2008, corporate bonds have become an increasingly important source of financing also for non- financial companies. Two main factors seem to have contributed to this development: first the decrease in bank lending to non-financial companies (so-called deleveraging), and; second, the historically low levels of bond interest rates. From being a negligible source of external finance a decade ago, the outstanding stock of corporate bonds has reached significant levels also in emerging economies.
  • 19. 17 Figure 5. Average maturities for corporate bonds issued by non-financial companies, 2000–2015 Table 5. Average maturities for corporate bonds, 2000–2015 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 World 4.9 5.6 5.8 5.8 6.0 6.5 6.8 6.8 6.2 6.5 6.8 6.7 7.2 7.3 6.9 6.9 Non-financial 6.8 7.3 7.4 8.2 7.9 9.1 9.5 9.7 7.8 7.5 7.9 7.9 8.8 8.0 8.3 8.6 Financial 4.2 4.7 5.1 4.7 5.2 5.5 5.8 5.7 5.3 5.5 6.1 5.9 5.9 6.6 5.9 5.8 Investment grade 4.9 5.5 5.7 5.6 5.9 6.4 6.7 6.7 6.1 6.4 6.7 6.6 7.2 7.3 6.9 6.9 Non-investment grade 7.8 8.0 8.2 8.1 8.2 8.3 8.4 8.7 7.4 7.3 7.8 7.5 7.6 7.6 7.3 7.7 Advanced economies 4.9 5.5 5.8 5.8 6.1 6.6 6.9 7.0 6.1 6.5 6.9 7.0 7.7 8.1 7.4 8.0 Non-financial 6.9 7.2 7.5 8.4 8.0 9.2 9.7 10.1 8.0 7.9 8.4 8.4 9.3 9.1 8.9 10.0 Financial 4.2 4.6 5.1 4.7 5.2 5.6 5.8 5.9 5.1 5.2 6.0 6.1 6.3 7.1 6.2 6.5 Investment grade 4.9 5.5 5.7 5.7 5.9 6.5 6.8 6.9 6.1 6.4 6.8 7.0 7.8 8.2 7.4 8.0 Non-investment grade 8.4 8.3 8.6 8.4 8.4 8.6 9.0 9.2 7.7 7.3 7.9 7.6 7.6 7.7 7.5 7.8 Emerging markets 4.9 6.3 5.7 5.5 5.8 5.8 6.2 5.9 6.5 6.4 6.5 5.4 5.7 5.3 5.2 4.3 Non-financial 5.4 7.6 6.3 6.7 7.3 8.6 8.1 8.2 6.7 6.1 6.1 6.0 6.9 5.4 5.8 4.8 Financial 4.6 5.6 5.3 4.8 5.0 4.6 5.5 4.9 6.3 6.7 6.8 5.1 5.1 5.1 4.8 3.9 Investment grade 4.9 6.4 5.7 5.4 5.7 5.7 6.2 5.8 6.5 6.3 6.4 5.4 5.6 5.2 5.2 4.2 Non-investment grade 5.0 4.5 5.7 6.0 6.0 7.0 6.3 7.1 6.1 7.6 7.1 7.0 7.6 6.9 6.2 6.8 United States 4.8 6.3 7.2 7.5 7.4 8.3 8.4 9.5 8.8 9.3 9.6 10.2 10.8 10.8 10.6 11.1 Non-financial 8.1 9.2 9.8 9.9 9.4 11.3 11.7 12.4 10.9 9.9 10.8 11.5 11.8 11.8 12.1 12.4 Financial 3.8 4.9 5.9 5.9 6.0 6.2 6.5 7.7 6.5 7.7 7.9 8.3 8.3 9.0 7.8 8.6 Investment grade 4.7 6.2 7.0 7.4 7.1 8.2 8.3 9.5 8.9 9.9 10.3 11.0 12.0 11.9 11.6 11.8 Non-investment grade 8.7 8.3 8.7 8.5 8.5 8.7 9.4 9.7 8.1 7.4 8.0 7.7 8.0 8.0 7.6 8.0 Europe 5.1 5.0 5.3 5.0 5.3 6.0 6.4 6.2 5.8 6.0 6.7 6.5 6.8 7.1 6.9 7.3 Non-financial 6.4 7.0 6.8 8.3 7.5 8.3 10.1 10.6 8.0 8.0 8.4 7.7 8.7 7.9 8.1 8.1 Financial 4.8 4.4 4.9 4.3 4.9 5.6 5.7 5.5 5.3 5.0 6.2 6.2 6.0 6.7 6.4 7.0 Investment grade 5.0 5.0 5.3 4.9 5.2 6.0 6.4 6.2 5.8 6.0 6.6 6.5 6.8 7.0 6.9 7.2 Non-investment grade 8.2 8.4 8.1 7.6 8.1 7.8 8.3 7.8 5.5 6.7 6.9 6.8 6.5 7.5 7.5 7.8 OECD 4.9 5.6 5.9 5.9 6.2 6.8 7.1 7.2 6.3 6.6 6.9 7.2 7.9 8.3 7.5 8.1 Non-financial 7.1 7.4 7.7 8.7 8.4 9.6 10.3 10.4 8.6 8.1 8.8 8.8 9.7 9.5 9.3 10.1 Financial 4.2 4.7 5.1 4.7 5.3 5.6 5.9 6.0 5.2 5.2 5.9 6.2 6.3 7.1 6.2 6.6 Investment grade 4.9 5.5 5.8 5.8 6.0 6.6 7.0 7.1 6.3 6.5 6.8 7.1 7.9 8.3 7.5 8.1 Non-investment grade 8.2 8.2 8.6 8.4 8.4 8.7 9.1 9.4 7.7 7.3 7.9 7.6 7.7 7.8 7.5 7.9 Note: Average maturities are expressed in number of years. Source: Thomson Reuters, OECD calculations. See Annex for details. The maturity divergence The average maturities for investment grade bonds issued by non-financial companies in the United States have always been longer than for bonds issued by companies in the rest of the world. However, the total difference in average maturity has increased quite considerably since the financial crisis.
  • 20. 18 Figure 6. Initial public offerings (IPOs), 2000–2015 Table 6. Initial public offerings, 2000–2015 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 World 283 122 84 67 156 183 277 324 105 119 291 155 104 139 227 172 Non-financial 263 96 61 45 130 149 206 251 74 99 205 140 94 113 186 129 Financial 20 26 24 22 26 34 71 73 31 21 86 16 10 26 41 43 Advanced economies 244 109 63 44 122 120 149 146 46 37 130 73 59 93 142 115 Non-financial 225 83 43 31 101 105 125 127 22 31 82 64 55 80 113 89 Financial 19 26 20 12 20 15 24 19 24 6 48 9 4 12 29 26 Emerging markets 39 13 22 23 34 63 128 178 59 82 161 82 44 47 85 58 Non-financial 38 13 18 14 28 44 81 124 52 68 122 75 39 32 73 40 Financial 1 0 4 10 6 19 48 54 8 15 38 7 6 14 12 17 United States 81 48 27 13 43 37 38 35 29 17 37 28 35 47 46 24 Non-financial 74 38 15 10 33 31 32 33 7 15 33 26 33 43 31 20 Financial 7 10 12 3 11 6 6 2 22 2 4 2 2 4 16 4 Europe 119 43 20 9 40 57 74 78 10 5 25 29 10 25 58 61 Non-financial 112 29 19 6 36 51 62 69 9 2 22 23 7 19 45 47 Financial 7 14 1 3 4 6 12 10 1 2 2 6 2 6 12 14 OECD 231 106 56 40 118 122 145 141 49 33 107 70 61 94 140 113 Non-financial 213 81 40 28 96 106 121 119 25 27 79 62 55 83 111 87 Financial 18 26 16 12 23 16 23 22 24 5 29 8 5 11 29 26 Note: All data are expressed in 2015 US dollar billion. Source: Thomson Reuters, OECD calculations. See Annex for details. An increase in emerging market use of public equity markets Companies tap public equity markets for funding for the first time by making an initial public offering (IPO). During the early 2000s, global IPO activity was dominated by companies from advanced economies. However, in the last ten years, companies from emerging markets account for almost half of the money raised through IPOs.
  • 21. 19 Figure 7. Small non-financial company IPOs in advanced economies, 1994–2015 Table 7. Small non-financial company IPOs in advanced and emerging economies Global Advanced economies Emerging economies 2000-2007 2008-2015 2000-2007 2008-2015 2000-2007 2008-2015 Total value of IPOs with size less than USD 100 M (2015 USD, million) 173,827 142,279 123,569 62,083 50,258 80,167 Share of all IPOs 14.5% 13.7% 10.3% 6.0% 4.2% 7.7% Number of IPOs with size less than USD 100 M (%) 7,765 4,926 5,881 2,699 1,884 2,227 Share of all IPOs 78.1% 70.8% 59.1% 38.8% 18.9% 32.0% Source: Thomson Reuters, OECD calculations. See Annex for details. A decline in initial public offerings by small companies The last decade has seen a fairly marked decline in the extent to which small and medium-sized growth companies access public equity markets for external funding. This trend is particularly marked in the United States and in Europe. Today, companies in advanced economies that actually use public equity markets for the first time tend to be larger at the time of the IPO.
  • 22. 20 Figure 8. Secondary public offerings in advanced and emerging economies, 2000–2015 Table 8. Secondary public offerings, 2000–2015 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 World 457 293 265 311 391 422 460 593 648 946 733 505 517 575 606 692 Non-financial 397 239 210 227 320 307 325 440 293 476 463 317 323 437 468 517 Financial 60 54 54 84 71 115 135 154 355 469 270 189 194 137 138 175 Advanced economies 430 276 241 291 355 353 382 415 520 790 422 323 347 408 422 461 Non-financial 374 225 198 214 291 263 276 329 200 381 246 212 222 318 316 348 Financial 56 51 43 77 64 91 106 85 320 409 176 110 124 90 105 113 Emerging markets 27 18 23 20 36 69 79 178 128 155 311 183 170 167 184 232 Non-financial 23 14 12 13 29 44 49 110 93 95 218 104 100 120 151 170 Financial 4 4 11 7 7 24 29 68 35 60 94 79 70 47 33 62 United States 147 88 76 78 94 86 94 88 167 220 149 90 135 133 117 146 Non-financial 138 79 68 67 86 69 79 79 57 74 56 61 72 125 105 126 Financial 10 9 8 11 7 18 15 10 109 146 93 29 64 8 13 20 Europe 180 119 100 125 157 158 159 179 246 348 128 123 102 167 182 156 Non-financial 141 98 71 84 122 109 93 123 70 156 78 64 67 99 111 104 Financial 38 21 29 42 36 49 65 57 176 192 50 58 35 68 71 52 OECD 410 270 239 273 344 336 359 370 511 760 402 314 321 408 393 408 Non-financial 397 239 210 227 320 307 325 440 293 476 463 317 323 437 468 517 Financial 60 54 54 84 71 115 135 154 355 469 270 189 194 137 138 175 Note: All data are expressed in 2015 US dollar billion. Source: Thomson Reuters, OECD calculations. See Annex for details. Public equity markets remain an important source of continuous financing The role of public equity markets in providing a company with new equity capital is not limited to the time of the initial public offering (IPO). They also provide an opportunity for companies that are already listed to raise additional capital through a secondary public offering (SPO) or “follow-on issue”. In fact, every year since 2000, the global amount of money raised through SPOs exceeded the amount of money raised through IPOs. Record SPO levels were reached in the two years following the 2008 financial crisis.
  • 23. 21 Figure 9. Corporate bond issuance by companies in energy, industrials and materials sectors, 2000–2015 Table 9. Distribution of corporate bond issuance among different sectors, 2000–2015 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Consumer Products and Services Volume 20 45 21 31 53 46 61 39 40 58 58 63 88 73 80 77 Share 1% 2% 1% 1% 2% 2% 2% 1% 1% 2% 2% 2% 2% 2% 2% 2% Consumer Staples Volume 57 70 69 71 38 41 45 71 94 113 88 84 125 132 92 117 Share 3% 3% 3% 3% 1% 1% 1% 2% 3% 4% 3% 3% 3% 4% 3% 4% Energy Volume 156 220 208 232 164 153 209 292 303 528 369 365 482 464 424 368 Share 8% 9% 10% 8% 6% 5% 6% 8% 11% 17% 12% 12% 13% 13% 12% 11% Financials Volume 1,346 1,308 1,286 1,881 2,130 2,165 2,699 2,574 1,927 1,539 1,829 1,744 1,867 1,678 1,987 1,753 Share 65% 55% 64% 68% 75% 76% 74% 72% 68% 48% 58% 56% 52% 48% 55% 52% Healthcare Volume 6 44 15 37 36 31 42 79 36 124 76 89 106 88 144 188 Share 0% 2% 1% 1% 1% 1% 1% 2% 1% 4% 2% 3% 3% 3% 4% 6% High Technology Volume 32 46 30 22 20 28 53 46 53 65 69 80 76 111 103 155 Share 2% 2% 1% 1% 1% 1% 1% 1% 2% 2% 2% 3% 2% 3% 3% 5% Industrials Volume 126 170 102 154 128 112 140 135 104 247 224 221 259 310 234 225 Share 6% 7% 5% 6% 4% 4% 4% 4% 4% 8% 7% 7% 7% 9% 6% 7% Materials Volume 53 75 78 95 72 63 95 86 84 173 161 160 219 173 134 115 Share 3% 3% 4% 3% 3% 2% 3% 2% 3% 5% 5% 5% 6% 5% 4% 3% Media and Entertainment Volume 46 66 46 72 57 48 74 50 35 85 86 65 105 83 92 87 Share 2% 3% 2% 3% 2% 2% 2% 1% 1% 3% 3% 2% 3% 2% 3% 3% Real Estate Volume 18 30 27 32 42 40 65 53 24 41 58 55 80 109 108 91 Share 1% 1% 1% 1% 1% 1% 2% 1% 1% 1% 2% 2% 2% 3% 3% 3% Retail Volume 32 56 35 39 36 34 41 67 46 55 57 61 74 84 81 73 Share 2% 2% 2% 1% 1% 1% 1% 2% 2% 2% 2% 2% 2% 2% 2% 2% Telecommunications Volume 181 229 85 82 82 80 116 89 92 149 99 112 123 200 138 94 Share 9% 10% 4% 3% 3% 3% 3% 2% 3% 5% 3% 4% 3% 6% 4% 3% Note: All data are expressed in 2015 US dollar billion. Source: Thomson Reuters, OECD calculations. See Annex for details. New industrial sectors using corporate bonds The single most important sector with respect to the use of corporate bonds is the financial services sector. However, the relative importance of the financial services sector has declined by one fifth during the post-crisis period and was mainly replaced by the energy, industrials and materials sectors. This shift was also the result of a large absolute increase in the amount of money raised by these supercycle sectors.
  • 24. 22 Figure 10. Distribution of public equity financing among different sectors, 2000–2015 Table 10. Distribution of public equity financing among different sectors, 2000–2015 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Consumer Products and Services Volume 32 17 14 11 19 22 33 29 7 17 22 23 15 34 42 43 Share 4% 4% 4% 3% 3% 4% 5% 3% 1% 2% 2% 3% 2% 5% 5% 5% Consumer Staples Volume 15 21 13 9 23 22 28 36 47 38 41 29 27 41 34 28 Share 2% 5% 4% 2% 4% 4% 4% 4% 6% 4% 4% 4% 4% 6% 4% 3% Energy Volume 54 46 43 45 87 93 93 124 70 100 196 92 80 86 97 80 Share 7% 11% 12% 12% 16% 15% 13% 14% 9% 9% 19% 14% 13% 12% 12% 9% Financials Volume 80 80 78 106 97 149 206 227 386 490 356 205 205 164 179 218 Share 11% 19% 22% 28% 18% 25% 28% 25% 51% 46% 35% 31% 33% 23% 22% 25% Healthcare Volume 50 31 18 16 28 30 29 42 15 26 28 30 26 41 59 86 Share 7% 8% 5% 4% 5% 5% 4% 5% 2% 2% 3% 5% 4% 6% 7% 10% High Technology Volume 205 50 34 42 60 61 58 66 16 52 54 48 50 64 99 81 Share 28% 12% 10% 11% 11% 10% 8% 7% 2% 5% 5% 7% 8% 9% 12% 9% Industrials Volume 45 37 39 37 68 70 80 125 73 95 138 64 78 98 108 104 Share 6% 9% 11% 10% 12% 12% 11% 14% 10% 9% 13% 10% 13% 14% 13% 12% Materials Volume 15 20 26 30 42 45 78 124 81 132 107 104 57 61 67 72 Share 2% 5% 7% 8% 8% 7% 11% 14% 11% 12% 10% 16% 9% 9% 8% 8% Media and Entertainment Volume 41 20 25 14 31 27 30 28 9 27 17 17 19 37 43 38 Share 6% 5% 7% 4% 6% 4% 4% 3% 1% 3% 2% 3% 3% 5% 5% 4% Real Estate Volume 4 5 3 5 13 18 38 64 16 49 22 13 15 29 38 37 Share 1% 1% 1% 1% 2% 3% 5% 7% 2% 5% 2% 2% 2% 4% 5% 4% Retail Volume 16 18 17 16 21 12 28 21 11 22 21 27 27 34 41 39 Share 2% 4% 5% 4% 4% 2% 4% 2% 1% 2% 2% 4% 4% 5% 5% 5% Telecommunications Volume 182 71 40 46 58 56 36 32 22 16 21 8 22 22 27 35 Share 25% 17% 11% 12% 11% 9% 5% 3% 3% 2% 2% 1% 3% 3% 3% 4% Note: All data are expressed in 2015 US dollar billion. Source: Thomson Reuters, OECD calculations. See Annex for details. Sectoral trends in the use of public equity markets At the time of the financial crisis, companies in the financial services sector significantly increased their use of public equity markets for external financing. This strengthening of financial companies’ balance sheets was mainly done through secondary public offerings (SPO). The use of public equity markets by the telecommunications industry before the crisis has declined to very low levels.
  • 25. 23 Figure 11. Rating quality and new supply of corporate bonds, 2000–2015 Table 11. Distribution of corporate bond issuance among rating categories, as a percentage of total, 2000–2015 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 A-grade investment 86% 78% 80% 78% 80% 83% 81% 82% 88% 71% 65% 67% 58% 53% 55% 58% B-grade investment 9% 16% 14% 13% 11% 10% 11% 10% 10% 19% 18% 17% 25% 27% 26% 27% B-grade non-investment 4% 6% 5% 8% 8% 6% 7% 7% 3% 10% 16% 14% 16% 18% 18% 14% C-grade non-investment 0% 0% 0% 0% 1% 1% 1% 1% 0% 0% 1% 1% 1% 2% 1% 1% Note: There are eleven non-investment grade categories: five from C, C to CCC+; and six from B, B- to BB+. There are ten investment grade categories: three from B, BBB- to BBB+; and seven from A, A- to AAA. The index is weighted as one for C, two for CC and rising to twenty one for AAA. A fall in the index indicates declining quality. Source: Thomson Reuters, Bloomberg, OECD calculations. See Annex for details. A decline in overall corporate bond ratings Since the financial crisis, corporate bond markets have experienced a significant decrease in overall corporate bond rating quality. This is the result of an increased share of non-investment grade bonds and B-grade bonds being issued. As a consequence, the weighted bond rating index, which is constructed by assigning the value 1 to the lowest credit quality rating and 21 to the highest credit quality rating, shows an almost 20% decline in rating quality since 2008.
  • 26. 24 Figure 12. Covenant protection index for corporate bonds issued in the United States, 2000–2014 Note: The 34 covenant variables in the dataset are matched to the 15 covenant types. If a bond had at least one covenant that belongs to a certain covenant type, it was considered to have that covenant type. For each covenant type, a binary variable was generated, which is equal to 1 if the covenant type is available in the bond indenture. The binary variables are then summed, divided by 15 to create an index that ranges from 0 to 1, with the ratio 1 (0) denoting the highest (lowest) possible protection for bondholders. Data from the binary variables frequency in selected sub-categories are shown in Table 12 below. Source: OECD, “Corporate Bonds, Bondholders and Corporate Governance”, OECD Corporate Governance Working Papers, No. 16, updated with 2014 data. The decline in corporate bond covenant protection The increase in non-investment grade bond issues has been accompanied by a shift in the characteristics of corporate bond indentures, which is the contract containing the main features of the bond, including any restrictive conditions (the covenants). The covenant protection index, which tracks the frequency of different covenants used in the United States, has declined significantly for non-investment grade bonds since 2005. While a minor improvement can be noted in the last couple of years, the overall decline and the accompanying decline in rating quality, suggest that bond investors in their search for yield have been willing to trade governance rights and protection for higher expected returns.
  • 27. 25 Table 12. Frequency of different types of corporate bond covenants, 2000–2014 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Number of observations Non-IG 282 287 253 348 460 385 313 345 164 250 470 466 491 448 354 IG 664 753 597 638 456 479 490 607 530 687 582 712 823 848 864 Restrictionson Payouts Dividend Payment Restrictions Non-IG 76% 82% 86% 78% 82% 84% 65% 58% 59% 45% 50% 54% 34% 41% 42% IG 2% 3% 1% 3% 6% 6% 1% 2% 1% 2% 2% 1% 1% 1% 0% Share Repurchase Restrictions Non-IG 88% 88% 91% 86% 84% 86% 67% 61% 57% 49% 53% 63% 43% 54% 46% IG 6% 4% 4% 3% 2% 1% 0% 1% 1% 1% 2% 1% 0% 0% 1% RestrictionsonFinancingActivities Funded Debt Restrictions Non-IG 0% 0% 0% 0% 0% 0% 0% 1% 1% 0% 0% 0% 0% 0% 0% IG 2% 1% 1% 1% 1% 1% 0% 2% 1% 0% 0% 1% 1% 1% 0% Subordinated Debt Restrictions Non-IG 11% 28% 36% 7% 0% 1% 2% 2% 1% 0% 0% 0% 0% 0% 0% IG 0% 0% 0% 0% 0% 1% 1% 0% 1% 1% 0% 1% 2% 0% 1% Senior Debt Restrictions Non-IG 2% 1% 0% 2% 0% 0% 0% 1% 0% 0% 0% 0% 0% 0% 0% IG 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Secured Debt Restrictions Non-IG 78% 71% 74% 76% 72% 88% 78% 66% 68% 54% 53% 57% 45% 62% 57% IG 60% 74% 67% 66% 55% 61% 60% 60% 69% 57% 50% 51% 54% 52% 53% Leverage Restrictions Non-IG 91% 91% 93% 89% 89% 88% 72% 64% 61% 54% 56% 65% 48% 60% 57% IG 14% 13% 12% 12% 15% 17% 15% 12% 8% 6% 11% 11% 11% 10% 17% Sale & Lease Back Non-IG 49% 41% 45% 49% 43% 44% 47% 27% 18% 29% 29% 23% 22% 26% 30% IG 30% 36% 35% 37% 28% 31% 35% 41% 48% 44% 41% 43% 46% 43% 40% Stock Issue Restrictions Non-IG 62% 67% 66% 63% 70% 70% 52% 49% 48% 31% 31% 40% 23% 28% 26% IG 4% 4% 6% 8% 12% 10% 7% 5% 3% 1% 2% 0% 0% 0% 1% Event-drivenCovenants Rating & NW Triggers Non-IG 1% 5% 5% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% IG 1% 2% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% Cross Default Provisions Non-IG 94% 96% 95% 75% 92% 90% 73% 70% 74% 64% 67% 73% 63% 75% 74% IG 49% 48% 40% 38% 52% 64% 59% 59% 58% 49% 74% 89% 89% 94% 89% Poison Put Non-IG 92% 89% 93% 86% 88% 88% 81% 92% 82% 89% 90% 91% 91% 89% 86% IG 5% 5% 2% 2% 2% 3% 8% 39% 39% 42% 45% 38% 42% 35% 43% RestrictionsonInvestment ActivitiesandAssetSales Asset Sale Restrictions Non-IG 95% 99% 98% 99% 98% 98% 92% 78% 75% 67% 67% 77% 65% 75% 75% IG 87% 92% 96% 93% 88% 90% 87% 83% 84% 59% 68% 81% 87% 89% 89% Investment Policy Restrictions Non-IG 9% 7% 4% 2% 2% 2% 5% 1% 4% 21% 10% 0% 1% 1% 2% IG 2% 2% 1% 1% 0% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% Merger Restrictions Non-IG 92% 98% 97% 97% 97% 97% 92% 78% 75% 66% 67% 75% 63% 75% 75% IG 86% 91% 95% 93% 88% 89% 88% 83% 84% 59% 66% 81% 87% 89% 88% Source: OECD, “Corporate Bonds, Bondholders and Corporate Governance”, OECD Corporate Governance Working Papers, No. 16, updated with 2014 data.
  • 28. 26 Figure 13. Distance-to-default (DTD) of large listed banks, 1999–2016 Table 13. Average distance-to-default (DTD) of large listed banks, 2003–2016 All Large Banks G-SIBs Other Large Banks United States Europe Asia Latin America United States Europe Asia United States Europe Asia Latin America Jun-03 2.79 2.27 1.82 1.82 2.65 2.27 1.31 3.37 2.26 2.68 1.82 Dec-03 4.49 3.50 1.94 2.80 4.32 3.52 1.21 5.25 3.42 3.08 2.80 Jun-04 5.81 4.65 1.96 2.84 5.69 4.75 1.47 6.38 4.26 2.56 2.84 Dec-04 6.74 5.25 2.55 3.00 6.75 5.33 2.27 6.65 4.92 2.88 3.00 Jun-05 7.05 6.20 3.32 3.40 7.08 6.32 3.37 6.94 5.62 3.27 3.40 Dec-05 7.50 6.23 3.29 3.10 7.62 6.38 3.22 6.93 5.43 3.36 3.10 Jun-06 7.46 5.51 3.09 2.54 7.54 5.63 2.87 7.08 4.91 3.33 2.54 Dec-06 7.23 4.97 3.52 2.62 7.11 5.10 3.24 7.86 4.35 3.80 2.62 Jun-07 6.90 5.41 3.59 3.28 6.70 5.50 3.60 7.95 4.92 3.59 3.28 Dec-07 4.04 4.18 3.11 3.07 4.01 4.18 3.12 4.20 4.19 3.10 3.07 Jun-08 2.55 2.82 2.28 2.44 2.52 2.78 2.29 2.73 3.03 2.28 2.44 Dec-08 0.79 1.26 1.59 1.23 0.75 1.26 1.65 1.01 1.28 1.55 1.23 Jun-09 0.02 0.61 1.53 1.08 -0.01 0.63 1.53 0.14 0.53 1.53 1.08 Dec-09 0.56 1.07 2.24 2.20 0.56 1.13 2.15 0.57 0.85 2.31 2.20 Jun-10 2.64 2.09 3.02 2.77 2.66 2.14 3.08 2.53 1.90 2.97 2.77 Dec-10 3.08 2.32 3.51 3.13 3.10 2.32 3.80 2.98 2.31 3.32 3.13 Jun-11 3.76 3.00 3.86 3.47 3.79 3.03 3.84 3.58 2.85 3.87 3.47 Dec-11 2.36 1.85 4.03 2.79 2.29 1.87 3.88 2.71 1.73 4.13 2.79 Jun-12 2.17 1.69 4.26 2.72 2.08 1.73 4.27 2.65 1.51 4.26 2.72 Dec-12 3.54 2.34 5.02 3.31 3.35 2.35 4.54 4.50 2.27 5.32 3.31 Jun-13 4.51 2.83 4.67 3.75 4.33 2.82 3.98 5.41 2.90 5.08 3.75 Dec-13 5.26 3.62 4.27 3.60 5.09 3.67 3.72 6.13 3.39 4.57 3.60 Jun-14 5.70 4.17 4.73 3.35 5.55 4.27 4.47 6.45 3.79 4.86 3.35 Dec-14 6.15 4.57 5.10 2.79 6.04 4.60 4.58 6.70 4.44 5.35 2.79 Jun-15 5.86 4.24 4.06 2.50 5.80 4.19 4.05 6.18 4.45 4.06 2.50 Dec-15 4.80 3.74 3.22 2.39 4.79 3.67 3.26 4.82 4.01 3.21 2.39 Mar-16 4.06 3.23 3.10 2.24 4.03 3.21 2.91 4.22 3.35 3.19 2.24 Notes: Europe refers to the European Union, Norway and Switzerland. Banks included in the sample are listed in Bloomberg regional banking indices. The horizontal 3-standard-deviation line represents a minimal level of “safety” based on calibration from previous crises. The distance-to-default (DTD) is a measure that uses a combination of bank reported data, and market information to calculate the number of standard deviations a bank is from the default point, where the market values of assets equals the book value of debt. The formula is derived from the option pricing model of Black and Scholes (1973). Source: Thomson Reuters, Bloomberg, OECD calculations. See Annex for details. 0 1 2 3 4 5 6 7 8 Std. dev. United States Europe Asia Latin America Distance-to-default has fallen Bank default risk is measured by the distance-to-default (DTD). A bank defaults when DTD moves to 0 and below. Recently the average DTD of banks has fallen in all regions. In Asia, the DTD is back to levels last seen in 2010. In Latin America, the DTD is at levels last seen in 2009. US banks appear to be the strongest at this point. Nevertheless the situation bears watching closely.
  • 29. 27 Figure 14. Credit rating uplifts for the debt of large banks, 2007–2015 All banks 25th% tile Median 75th% tile Mean 2007 1 2 3 2.16 2008 1 2 3 2.33 2009 2 3 5 3.10 2010 2 3 4 3.11 2011 1 2 3 2.28 2012 1 2 3 2.42 2013 1 2 3 2.50 2014 1 2 3 2.46 2015 2 3 3 2.59 Globally systemically important banks (G-SIBs) 25th% tile Median 75th% tile Mean 2007 1 2 2 1.96 2008 2 2 2 2.15 2009 2 3 4 3.00 2010 2 3 4 3.04 2011 2 3 3 2.48 2012 2 3 3 2.60 2013 2 3 3 2.63 2014 2 3 3 2.55 2015 3 3 4 2.96 Other banks 25th% tile Median 75th% tile Mean 2007 1 2 3 2.19 2008 1 2 3 2.36 2009 2 3 5 3.11 2010 2 3 5 3.13 2011 1 2 3 2.24 2012 1 2 3 2.37 2013 1 2 3 2.46 2014 1 2 3 2.44 2015 2 2 3 2.52 Notes: Based on the credit rating uplift due to assumed external support, obtained by subtracting (the numerical equivalent of) the “stand-alone” credit rating from (the numerical equivalent of) the “all-in” credit rating for a sample of 204 international banks from 23 OECD countries. Mean, median and interquartile range are shown by straight line, dotted line and light-grey shaded area, respectively. Source: OECD Secretariat calculations based on publicly available data from Moody’s website. See Annex for details. 6 0 1 2 3 4 5 6 2007 2008 2009 2010 2011 2012 2013 2014 2015 Mean Median 0 1 2 3 4 5 6 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 1 2 3 4 5 6 2007 2008 2009 2010 2011 2012 2013 2014 2015 A measure of the value of implicit guarantees for the debt of large banks One measure of the value of (the perception of) implicit guarantees for the debt of banks is the credit rating uplift due to assumed external support. The uplift is obtained as the difference between an issuing banks’ “all- in” and its “stand-alone” credit ratings, where the latter abstracts from external support unlike the “all-in” rating. The average uplift for a sample of large international banks decreased from its peak levels obtained at the end of 2009-2010, although it has been slightly increasing again more recently. It tends to be larger for banks considered globally systemically important than for other banks.
  • 30. 28 Figure 15. Bank beta indicator for large listed banks, 1999–2016 Table 14. Average beta calculated using MSCI regional equity indices for large listed banks, 2003– 2016 All Large Banks G-SIBs Other Large Banks United States Europe Asia Latin America United States Europe Asia United States Europe Asia Latin America Jun-03 1.24 1.29 1.10 1.47 1.31 1.34 1.49 0.95 1.06 0.43 1.47 Dec-03 1.17 1.21 1.29 1.18 1.22 1.25 1.84 0.95 1.04 0.43 1.18 Jun-04 1.08 1.12 1.09 1.07 1.11 1.13 1.69 0.91 1.07 0.36 1.07 Dec-04 1.04 1.06 0.91 1.11 1.07 1.08 1.32 0.88 0.98 0.43 1.11 Jun-05 1.02 1.07 0.73 1.03 1.03 1.08 1.04 0.96 1.01 0.38 1.03 Dec-05 0.94 1.10 0.82 1.05 0.93 1.10 1.22 1.01 1.06 0.39 1.05 Jun-06 0.97 1.10 0.79 1.20 0.97 1.11 1.19 0.96 1.08 0.37 1.20 Dec-06 1.06 1.12 0.72 1.12 1.10 1.12 1.00 0.82 1.13 0.43 1.12 Jun-07 1.17 1.11 0.73 1.02 1.22 1.12 0.92 0.86 1.06 0.55 1.02 Dec-07 1.40 1.15 0.99 1.02 1.43 1.16 1.04 1.27 1.10 0.96 1.02 Jun-08 1.61 1.27 1.04 0.97 1.64 1.29 1.24 1.46 1.16 0.90 0.97 Dec-08 1.62 1.36 0.99 1.09 1.67 1.37 1.19 1.34 1.33 0.86 1.09 Jun-09 2.03 1.56 0.96 1.08 2.08 1.57 1.19 1.76 1.53 0.80 1.08 Dec-09 2.63 1.78 0.96 1.03 2.65 1.77 1.23 2.50 1.82 0.76 1.03 Jun-10 1.52 1.50 0.81 1.01 1.52 1.51 0.86 1.53 1.47 0.77 1.01 Dec-10 1.38 1.49 0.79 1.01 1.38 1.51 0.75 1.41 1.40 0.81 1.01 Jun-11 1.37 1.32 0.81 1.10 1.36 1.33 1.03 1.42 1.28 0.67 1.10 Dec-11 1.61 1.57 0.78 1.07 1.65 1.57 0.81 1.44 1.56 0.76 1.07 Jun-12 1.71 1.66 0.79 1.02 1.76 1.67 0.75 1.47 1.66 0.82 1.02 Dec-12 1.70 1.70 0.83 1.12 1.78 1.71 0.99 1.32 1.61 0.73 1.12 Jun-13 1.43 1.68 0.87 1.21 1.49 1.72 1.18 1.16 1.47 0.68 1.21 Dec-13 1.31 1.42 0.87 1.13 1.35 1.44 1.16 1.07 1.32 0.71 1.13 Jun-14 1.21 1.28 0.80 1.16 1.25 1.27 1.01 1.04 1.28 0.69 1.16 Dec-14 1.12 1.26 0.74 1.53 1.14 1.27 1.10 1.04 1.23 0.56 1.53 Jun-15 1.14 1.21 0.78 1.50 1.17 1.24 1.03 1.04 1.09 0.66 1.50 Dec-15 1.18 1.14 0.85 1.38 1.20 1.17 1.00 1.12 0.98 0.78 1.38 Mar-16 1.28 1.25 0.82 1.37 1.31 1.28 1.00 1.17 1.10 0.74 1.37 Source: Bloomberg, OECD calculations. See Annex for details. 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Beta Beta calculated using Regional MSCI Indices 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Beta Beta calculated using Global MSCI Index United States Europe Asia Latin America Bank beta indicator Beta is defined as the covariance of a firm’s stock returns with the market divided by variance of market returns (here calculated over a rolling window). The beta for a bank stock is a measure of the degree to which its returns co-vary with the market and therefore cannot be eliminated through diversification. Beta is a key input into the calculation of the bank-specific equity risk premium (the product of bank beta and the market equity risk premium). In crisis periods, bank betas rise on average raising their equity risk premia and tend to do so in a correlated way.
  • 31. 29 Table 15. Average beta calculated using MSCI global equity index for large listed banks, 2003– 2016 All Large Banks G-SIBs Other Large Banks United States Europe Asia Latin America United States Europe Asia United States Europe Asia Latin America Jun-03 1.47 1.37 0.15 0.66 1.56 1.42 0.17 1.10 1.14 0.12 0.66 Dec-03 1.34 1.28 0.46 0.70 1.40 1.32 0.64 1.08 1.14 0.18 0.70 Jun-04 1.13 1.14 1.01 1.24 1.16 1.16 1.50 0.97 1.05 0.43 1.24 Dec-04 1.07 1.11 0.71 1.57 1.10 1.14 0.88 0.91 1.00 0.51 1.57 Jun-05 1.11 0.98 0.58 1.27 1.14 0.99 0.82 1.00 0.95 0.33 1.27 Dec-05 0.93 1.09 0.57 1.48 0.92 1.09 0.80 0.97 1.06 0.33 1.48 Jun-06 0.85 1.37 0.60 2.15 0.87 1.38 0.85 0.77 1.29 0.33 2.15 Dec-06 0.84 1.50 0.72 2.27 0.89 1.50 0.94 0.56 1.52 0.50 2.27 Jun-07 1.00 1.42 0.66 2.01 1.04 1.43 0.65 0.74 1.40 0.67 2.01 Dec-07 1.35 1.42 0.60 2.00 1.39 1.43 0.33 1.16 1.34 0.83 2.00 Jun-08 1.45 1.62 0.63 1.69 1.49 1.65 0.61 1.24 1.44 0.65 1.69 Dec-08 1.75 1.49 0.59 1.75 1.83 1.49 0.52 1.35 1.45 0.64 1.75 Jun-09 2.25 1.70 0.54 1.61 2.33 1.70 0.46 1.86 1.67 0.59 1.61 Dec-09 2.68 2.19 0.50 1.36 2.72 2.18 0.48 2.51 2.25 0.51 1.36 Jun-10 1.38 2.11 0.41 1.35 1.38 2.12 0.26 1.36 2.08 0.51 1.35 Dec-10 1.28 2.03 0.43 1.18 1.27 2.06 0.26 1.30 1.90 0.55 1.18 Jun-11 1.18 1.76 0.53 1.02 1.17 1.78 0.48 1.23 1.67 0.56 1.02 Dec-11 1.58 1.97 0.43 1.12 1.61 1.97 0.30 1.38 1.95 0.51 1.12 Jun-12 1.70 2.16 0.38 1.15 1.76 2.16 0.23 1.42 2.15 0.48 1.15 Dec-12 1.54 2.45 0.44 1.37 1.62 2.48 0.40 1.17 2.31 0.46 1.37 Jun-13 1.41 2.27 0.48 1.29 1.47 2.34 0.48 1.11 1.98 0.48 1.29 Dec-13 1.29 1.70 0.63 1.20 1.35 1.73 0.58 1.00 1.59 0.66 1.20 Jun-14 1.19 1.53 0.57 1.11 1.24 1.53 0.60 0.95 1.54 0.55 1.11 Dec-14 1.27 1.51 0.22 0.86 1.29 1.51 0.23 1.16 1.47 0.21 0.86 Jun-15 1.26 1.44 0.27 1.61 1.28 1.48 0.24 1.15 1.26 0.28 1.61 Dec-15 1.27 1.24 0.52 1.65 1.28 1.29 0.54 1.21 1.04 0.51 1.65 Mar-16 1.36 1.34 0.54 1.50 1.39 1.38 0.50 1.24 1.18 0.56 1.50 Notes: Europe refers to the European Union, Norway and Switzerland. Banks included in the sample are listed in Bloomberg regional banking indices. Beta is defined as the covariance of a bank's stock returns with MSCI benchmark (either related regional or global benchmarks) divided by variance of market returns. It is an indicator of the systemic importance a bank with respect to the economy. Source: Bloomberg, OECD calculations. See Annex for details.
  • 32. 30 Table 16. Total investment of pension funds and all retirement vehicles, 2015 Pension funds All retirement vehicles Millions of national currency Millions of USD % of GDP % change % of all retirement vehicles % of GDP Australia 1,894,431 1,454,923 117.7 10.1 97.1 121.2 Austria 19,646 21,389 5.8 3.3 Belgium 24,117 27,018 5.9 8.5 Canada 1,583,494 1,182,241 79.8 5.2 50.8 157.0 Chile 109,433,421 154,711 69.6 8.9 100.0 69.6 Czech Republic 373,069 15,029 8.3 10.0 100.0 8.3 Denmark 888,707 130,118 44.8 -4.7 22.0 203.3 Estonia 2,613 2,844 12.8 18.5 88.2 14.5 Finland 105,258 114,594 50.8 France 12,200 13,282 0.6 17.6 5.6 10.0 Germany 199,197 216,865 6.6 2.4 Greece 1,135 1,236 0.6 2.8 Hungary 1,381,292 4,819 4.1 5.7 72.3 5.7 Iceland 3,266,214 25,204 149.2 12.0 94.8 157.3 Ireland 105,400 114,749 49.1 91.2 53.9 Israel 627,569 160,833 54.5 5.1 Italy 114,600 124,765 7.0 6.5 79.5 8.8 Japan 159,757,300 1,325,787 32.0 1.6 100.0 32.0 Korea 136,427,700 116,356 8.8 25.6 30.2 29.0 Luxembourg 1,444 1,572 2.8 -2.7 Mexico 2,789,870 162,140 15.4 4.2 93.0 16.6 Netherlands 1,210,321 1,317,676 178.4 1.7 New Zealand 53,235 36,317 22.2 21.8 100.0 22.2 Norway 283,126 32,137 9.0 8.7 Poland 142,810 36,608 8.0 -5.6 94.0 8.5 Portugal 18,164 19,775 10.1 3.8 Slovak Republic 8,037 8,750 10.3 1.2 100.0 10.3 Slovenia 1,641 1,786 4.3 4.2 61.0 7.0 Spain 103,862 113,074 9.6 3.7 66.2 14.5 Sweden 380,000 45,019 9.1 4.4 13.6 67.4 Switzerland 797,648 804,000 124.7 2.6 Turkey 42,959 14,762 2.2 24.0 United Kingdom 1,818,507 2,694,846 97.5 1.9 United States 14,299,033 14,299,033 79.7 -0.9 59.9 133.1 OECD 24,794,259 84.5 Source: OECD Global Pension Statistics; the French Asset Management Association; Bank of Korea; Bank of Japan; Bank of Mexico; Reserve Bank of New Zealand; Willis Towers Watson, Global Pension Assets Study 2016 (Switzerland). See Annex for details. Pension funds’ investments fell slightly in 2015 relatively to 2014 Pension funds’ investments fell slightly in the OECD area in 2015 relatively to their 2014 level (USD 25.2 trillion according to the last report Pension Markets in Focus 2015). They were still close to USD 25 trillion at the end of 2015. Pension funds’ investments, expressed in national currency, grew in most countries between 2014 and 2015, except Denmark, Luxembourg, Poland and the United States. In Denmark however, private pension investments are mainly channelled through life insurance companies instead of pension funds. The overall size of investments in the pension system in Denmark exceeded two times its GDP. The decline in OECD total pension fund investments was partly driven by the United States, which represented 58% of all pension funds’ investment in the OECD area.
  • 33. 31 . Figure 16. Pension funds' real net investment rate of return in selected OECD countries, 2014–2015 Table 17. Pension funds' real net rate of investment returns in selected OECD countries, 2005–2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Australia 10.1 8.9 12.9 -11.4 -10.2 5.6 5.3 0.6 10.3 8.3 6.4 Austria 9.0 3.8 -1.8 -14.4 7.3 3.7 -6.0 5.5 2.9 6.2 1.2 Belgium 10.3 10.3 7.7 -22.3 13.4 4.4 -4.6 9.2 5.8 10.7 Canada 10.7 10.8 1.0 -16.9 10.3 7.6 1.8 7.9 9.8 7.8 1.4 Chile 5.0 14.4 4.4 -24.1 22.0 8.3 -6.0 5.1 3.5 8.1 1.5 Czech Republic 2.7 1.3 -2.0 -1.5 -0.6 0.7 0.5 0.2 0.2 1.2 0.9 Denmark 14.7 1.4 -3.3 5.1 1.2 7.1 12.2 5.3 -4.5 16.6 0.8 Estonia 7.2 2.2 -5.4 -32.4 14.8 2.1 -8.0 5.2 0.9 4.7 2.1 Finland 5.2 6.0 6.2 5.3 Germany 3.4 3.2 1.0 0.5 3.9 3.6 1.0 2.7 2.8 4.4 Greece 2.3 0.3 -7.8 -5.6 5.0 7.7 6.5 4.6 Hungary 7.6 1.2 -3.9 -21.7 12.8 4.2 7.8 7.0 9.6 3.7 Iceland 11.8 8.8 0.4 -23.1 0.9 1.3 2.3 7.1 4.9 7.2 6.8 Ireland -7.4 -35.7 Israel 7.2 5.7 3.5 -16.3 20.2 6.9 -4.3 7.9 8.3 5.8 3.6 Italy 6.1 2.1 0.3 -5.3 5.3 1.2 -2.8 4.0 3.9 5.7 2.6 Korea 0.6 6.0 0.6 -2.7 -2.2 2.1 0.0 3.3 2.6 2.3 Luxembourg 4.9 -2.5 -11.4 6.5 0.7 -2.3 6.0 1.7 8.3 0.6 Mexico 4.8 5.6 -0.1 -7.8 7.5 6.6 1.2 9.7 -1.5 4.7 Netherlands 10.9 6.8 0.6 -17.3 11.5 8.9 4.3 9.5 1.6 15.1 7.1 New Zealand 4.3 8.8 5.0 -5.5 -9.5 10.5 3.1 1.6 9.5 7.2 Norway 9.2 7.4 3.1 -10.6 9.8 5.5 -0.1 6.1 7.9 5.1 1.1 Poland 12.9 13.4 1.5 -17.3 8.9 7.2 -9.1 1.6 2.7 -4.0 Portugal 7.1 7.1 5.5 -13.2 11.6 -3.0 -7.3 5.8 4.9 6.9 2.1 Slovak Republic -0.1 -8.9 1.0 0.0 -3.8 0.4 1.1 3.9 1.0 Slovenia -1.0 -5.4 4.2 1.8 -1.8 4.5 2.5 6.7 2.4 Spain -9.9 6.9 -2.2 -2.3 3.7 7.9 8.0 2.0 Sweden -1.0 7.9 6.7 Switzerland 9.2 5.3 0.2 -13.8 9.9 2.8 0.6 7.5 5.9 7.2 Turkey 22.1 1.4 13.2 0.9 17.6 1.9 9.6 -7.6 5.6 -5.9 United Kingdom 19.8 10.3 0.9 -15.9 13.4 11.2 8.3 9.0 5.4 5.2 3.0 United States 1.4 5.4 -1.5 -24.4 8.6 5.3 -4.3 4.6 11.2 3.3 -1.7 Note: All data are expressed in percent. Source: OECD Global Pension Statistics and other national sources. See Annex for details. 7.1 6.8 6.4 5.3 4.6 3.7 3.6 3.3 3.0 2.6 2.4 2.1 2.1 2.1 2.0 1.5 1.4 1.2 1.1 1.0 0.9 0.8 0.6 0.4 -1.7 -4.0 -5.9 -8 -6 -4 -2 0 2 4 6 8 Netherlands Iceland Australia Finland Greece Hungary Israel Japan United Kingdom Italy Slovenia Estonia Portugal Simple average Spain Chile Canada Austria Norway Slovak Republic Czech Republic Denmark Luxembourg Weighted average United States Poland Turkey % The low returns in 2015 mostly explain the fall in pension funds’ investments Real net investment returns were low in 2015, with a weighted OECD average at 0.4%. These low real net returns help explain the relative fall in OECD pension funds’ investments. Real investment rates of return ranged from positive values, peaking at 7.1% in the Netherlands, to negative values, down to - 5.9% for Turkey’s personal plans. Twenty-two countries witnessed positive investment rates of return, but lower than 2% for eight of them. Three OECD countries had negative returns in 2015: Poland, Turkey and the United States which dragged the OECD weighted average close to 0.
  • 34. 32 Figure 17. Pension fund asset allocation in selected asset classes in selected OECD countries, 2015 Note: All data are expressed in percent of total investment. Source: OECD Global Pension Statistics; Australian Bureau of Statistics; Bank of Japan. See Annex for details. 0 10 20 30 40 50 60 70 80 90 100 Poland Australia United States Iceland Finland Chile Belgium Netherlands Ireland Norway Austria Estonia Canada Luxembourg United Kingdom Italy Portugal Turkey Denmark Spain Greece Japan Hungary Israel Germany Slovak Republic Slovenia Czech Republic Shares Bills and bonds Other Negative returns in stock markets may be behind the weak performance of pension funds’ investments in 2015 Pension funds’ low performance may be due to the negative evolution of stock markets in 2015. The S&P 500 and FTSE 100 indices exhibited lower levels at the end of 2015 compared to 2014. The MSCI Pacific Index slightly increased by 0.4% at the end of 2015 compared to its level at the end of 2014. These developments may have weakened pension funds’ investment performance, especially in the case of the United States, where pension funds invested 47% of their portfolios in shares in 2015.
  • 35. 33 Figure 18. Foreign direct investment inflows by region, 2005–2015 Table 18. FDI inflows by selected regions, 2005–2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015p Total World 982 1,447 2,000 1,577 1,181 1,505 1,700 1,470 1,578 1,400 1,833 European Union (EU) 458 527 828 317 377 380 415 294 319 282 434 United States 113 243 221 310 150 206 236 194 217 112 385 China 104 124 156 172 131 244 280 241 291 268 250 Other G20 118 237 413 429 251 314 371 339 400 348 275 Rest-of-the-world 189 316 382 349 272 360 398 402 351 391 490 OECD 619 955 1,316 845 672 715 874 699 777 572 1,063 G20 countries 619 871 1,152 1,038 697 911 1,063 875 1,033 808 1,020 G20-OECD countries 445 641 826 629 417 461 558 442 544 339 614 G20 -non OECD countries 174 230 326 408 280 450 505 433 489 468 406 Table 19. FDI outflows by selected regions, 2005–2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015p Total World 852 1,375 2,182 1,730 1,089 1,408 1,529 1,215 1,283 1,368 1,626 European Union (EU) 556 664 1,217 752 348 478 480 256 279 290 508 United States 36 245 414 329 310 301 419 340 329 337 320 China 14 24 17 57 44 58 48 65 73 123 188 Other G20 81 220 270 371 212 247 296 298 344 335 286 Rest-of-the-world 165 223 265 221 175 324 286 256 259 284 325 OECD 728 1,148 1,897 1,414 871 1,029 1,213 921 926 875 1,183 G20 countries 404 805 1,408 1,196 786 860 1,042 826 816 881 871 G20 - OECD countries 363 698 1,303 1,029 689 711 904 705 636 635 617 G20 - non OECD countries 41 108 104 167 96 149 138 121 180 245 254 Notes: All data are expressed in US dollar billion. p: preliminary data; Data are updated as of April 2016. By definition, inward and outward FDI worldwide should be equal. However, in practice, there are statistical discrepancies between inward and outward FDI. Reference to ‘global FDI flows’ refer to the average of these two figures. Source: OECD Foreign direct investment statistics database and IMF. See Annex for details. 0 300 600 900 1 200 1 500 1 800 2 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015p USD bln EU United States China Other G20 Economies Rest-of-the-world OECD Global trends in FDI flows Global foreign direct investment (FDI) flows stagnated following the global financial crisis, and, despite a 25% increase in 2015, still remain about one tenth below their pre-crisis peak. The prolonged recovery in FDI is largely due to persistent weakness in the EU, and, to a much lesser extent, the United States following the financial crisis. In contrast, FDI inflows to China are higher than before the crisis. FDI inflows to the non-OECD G20 economies fell in 2015 largely due to drops for Brazil, Indonesia, Russia, and South Africa as these economies struggled with lower commodity prices.
  • 36. 34 Figure 19. Foreign direct investment by instruments, 2005–2015 Source: OECD Foreign direct investment statistics database and IMF. 0 200 400 600 800 1000 1200 1400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USDbln OECD 0 200 400 600 800 1000 1200 1400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USDbln Non-OECD Equity Reinvestmentofearnings Debt Equity capital FDI flows surged in 2015 In OECD economies, the immediate fall after the financial crisis in foreign direct investments (FDI) was mainly the result of a fall in reinvested earnings and debt. While both reinvested earnings and debt financing picked up in 2009, equity investments continued to decline quite substantially until 2014. In 2015, equity capital more than doubled from the previous year; debt FDI also increased. For non-OECD economies, reinvested earnings and to some extent debt have come to play a more important role as a source of funding of FDI after the financial crisis.
  • 37. 35 Table 20. FDI inflows and outflows by instrument for selected regions, 2005–2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 FDI inflows - Equity capital World 597 806 1202 1145 705 827 776 692 735 567 927 OECD 392 532 824 727 452 469 419 345 363 255 609 G20 396 492 761 746 426 497 525 454 546 336 583 OECD G20 283 346 546 492 275 289 287 243 289 141 383 Non OECD G20 113 146 215 254 151 208 238 212 257 195 200 Rest of the World 91 128 164 164 102 151 119 134 115 117 118 FDI inflows - Reinvestment of earnings World 258 395 500 291 309 549 587 551 547 630 568 OECD 156 258 322 123 128 243 244 255 257 311 267 G20 155 216 238 164 152 324 341 306 320 352 290 OECD G20 113 163 182 87 59 141 142 154 175 195 154 Non OECD G20 42 52 56 77 93 184 199 151 145 157 136 Rest of the World 61 85 122 90 88 122 143 145 146 163 165 FDI inflows - Debt World 127 245 298 141 167 129 337 227 295 202 338 OECD 71 164 170 -6 91 4 211 99 157 6 187 G20 68 164 153 128 118 90 196 115 167 119 147 OECD G20 49 132 98 51 83 32 129 45 79 3 77 Non OECD G20 19 32 55 77 36 58 68 70 87 116 70 Rest of the World 37 49 72 70 39 67 59 58 51 80 81 FDI outflows - Equity capital World 495 782 1185 992 570 685 686 576 571 461 724 OECD 437 671 1039 846 439 486 541 425 339 199 531 G20 225 419 690 625 344 421 446 385 383 272 348 OECD G20 204 354 637 544 277 314 351 281 201 105 226 Non OECD G20 21 65 54 82 67 106 95 104 183 167 121 Rest of the World 37 46 92 64 64 93 49 47 50 95 73 FDI outflows - Reinvestment of earnings World 266 562 679 444 461 679 717 645 638 734 628 OECD 226 507 607 354 381 541 555 518 499 573 480 G20 168 438 524 407 347 490 541 475 469 525 444 OECD G20 156 418 500 366 328 449 494 441 431 464 372 Non OECD G20 11 20 24 41 19 41 47 35 38 61 72 Rest of the World 29 36 49 50 60 97 115 92 101 100 77 FDI outflows - Debt World 91 31 318 294 58 44 127 -6 74 173 274 OECD 65 -29 251 213 50 2 117 -23 88 104 172 G20 11 -51 194 163 95 -51 55 -35 -37 84 80 OECD G20 3 -74 167 119 85 -52 58 -17 5 67 19 Non OECD G20 9 22 27 44 10 2 -3 -17 -41 17 61 Rest of the World 17 38 40 36 -3 40 13 34 27 53 40 Notes: All date are expressed in US dollar billion. For OECD countries who did not report FDI aggregates by instrument to the OECD, instruments were estimated using data on instruments available from the IMF BOP database; or by using instrument shares observed in non-revised for historical years. Missing instruments for 2015 were estimated by distributing total FDI equally among the instruments. Instruments for non OECD G20 countries were gathered from national source websites and from the IMF. Missing instruments for those countries were estimated by distributing total FDI equally among instruments or by applying the average instrument shares observed in previous periods. Instruments for the rest of the world were estimated by applying the instruments shares observed on data available in the IMF BOP database for the rest of the world. 2015 data were estimated by applying the same instrument shares as observed in 2014. World is equal to OECD plus non-OECD G20 plus Rest of the World. Data are updated as of April 2016. Source: OECD and IMF.
  • 38. 36 Figure 20. Total FDI outflows from selected OECD countries with resident SPEs, 2005–2015 Figure 21. Total FDI inflows to selected OECD countries with resident SPEs, 2005–2015 Source: OECD calculations, OECD and IMF. 0 100 200 300 400 500 600 700 800 900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USDbln Non-SPE SPE 0 200 400 600 800 1000 1200 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USDbln Thousands Non-SPE SPE Capital passing through Special Purpose Entities (SPEs) dropped significantly in 2014 and 2015 Special Purpose Entities (SPEs) are entities whose role is to facilitate the internal financing of multinational enterprises but that have little or no physical presence in an economy. By excluding such entities from their FDI statistics, countries have a much better measure of the FDI into their country that is having a real impact on their economy. FDI flows to and from SPEs are significant for certain countries and are much more volatile than FDI flows into non-SPE or operating affiliates. While flows to and from SPEs dropped significantly in 2014 and 2015, it is too soon to say whether this reflects a long term decline in the use of SPEs.
  • 39. 37 Table 21. FDI outflows for countries with SPEs, 2005–2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015P Data including SPEs: Austria 78,074 11,226 66,751 28,534 12,355 -14,065 32,533 20,492 6,703 5,051 14,780 Chile2 6,212 10,534 13,617 17,040 8,388 11,803 15,513 Denmark 17,506 7,260 16,985 11,741 2,397 -1,423 9,627 -13,008 6,960 7,600 11,910 Hungary 12,656 19,084 67,478 70,686 4,498 -41,146 21,436 12,358 -2,819 4,813 -5,224 Iceland2 460 -295 -594 Luxembourg 124,542 114,537 265,999 135,226 227,057 205,556 374,294 369,305 518,540 235,198 304,222 Netherlands 248,511 461,992 205,473 364,080 385,931 210,620 388,351 257,720 417,751 98,586 78,251 Poland3 2,864 7,660 3,490 3,437 3,657 6,148 3,677 -2,660 -1,346 1,595 2,832 Portugal 1,643 6,214 5,262 1,163 -367 -9,783 13,447 -8,210 -2,043 4,108 8,167 Total 485,795 627,973 631,438 614,868 641,740 366,442 856,983 653,037 952,593 368,460 429,858 Data excluding SPEs. Austria 11,139 11,981 35,847 28,652 10,999 9,585 21,933 13,114 15,565 5,066 12,403 Chile2 2,183 2,171 2,573 8,041 6,487 10,226 12,470 17,252 8,780 11,857 15,550 Denmark 13,145 14,462 13,115 15,271 3,689 1,382 11,278 7,359 7,174 8,401 13,219 Hungary 2,171 4,346 4,300 2,638 1,852 1,173 4,713 11,717 1,870 3,521 1,534 Iceland2 7,084 5,495 10,105 -4,250 2,248 -2,368 18 -3,205 460 -257 -599 Luxembourg 9,034 7,183 73,363 11,737 6,709 20,842 9,052 2,771 25,278 23,438 39,378 Netherlands 105,999 72,534 55,691 68,345 26,267 68,363 34,818 6,174 69,960 55,971 113,449 Poland3 1,347 3,857 1,682 1,858 1,807 6,149 1,028 2,905 -451 1,975 4,060 Portugal 2,634 4,435 5,457 722 814 -9,956 13,917 -8,096 -1,035 4,539 7,979 Total 154,736 126,464 202,131 133,013 60,872 105,396 109,228 49,991 127,601 114,509 206,971 SPEs: Austria 66,936 -755 30,905 -118 1,356 -23,651 10,600 7,378 -8,862 -15 2,377 Chile -274 308 1,147 -212 -393 -54 -37 Denmark 4,361 -7,202 3,870 -3,530 -1,293 -2,804 -1,651 -20,367 -214 -801 -1,308 Hungary 10,484 14,739 63,178 68,049 2,646 -42,319 16,723 641 -4,689 1,292 -6,758 Iceland 0 -37 5 Luxembourg 115,508 107,354 192,636 123,490 220,348 184,714 365,242 366,534 493,262 211,761 264,844 Netherlands 142,512 389,458 149,782 295,735 359,664 142,257 353,533 251,546 347,791 42,615 -35,198 Poland 1,516 3,803 1,808 1,579 1,850 -1 2,649 -5,565 -895 -379 -1,227 Portugal -991 1,779 -194 441 -1,181 174 -470 -113 -1,008 -431 189 Total 340,326 509,175 441,985 485,646 583,116 258,678 747,773 599,842 824,992 253,951 222,887 Notes: All data are expressed in US dollar million. |: breaks in series; p: Preliminary data; Data are updated as of April 2016. 1. Information on resident SPEs for Estonia and Sweden (FDI flows only) is confidential. This information is not yet available separately for Canada, Ireland and Mexico. The information is available separately for Austria, Chile, Denmark, Hungary, Iceland, Korea, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom. However, the information is not displayed in the table for all countries, due to limited availability of historical data or to differences in data vintages. Resident SPEs are not present or not significant in Australia, the Czech Republic, Finland, France, Germany, Greece, Israel, Italy, Japan, New Zealand, the Slovak Republic, Slovenia, Turkey, and the United States. 2. Data for Chilean SPEs are not available from 2005 to 2008. Data for Iceland's SPEs are available from 2013 onward. 3. Data for 2015 for Poland correspond to asset/liability figures, while data for earlier years correspond to directional figures. Source: OECD calculations, OECD and IMF.
  • 40. 38 Table 22. FDI inflows for countries with SPEs, 2005–2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015P Data including SPEs: Austria 77,903 5,557 56,752 7,144 11,140 -21,694 17,184 7,372 -3,765 9,955 5,803 Chile2 12,371 16,583 16,674 24,977 17,878 21,231 20,176 Denmark 13,437 1,646 10,909 -4,007 -430 -12,547 9,598 -18,592 605 2,171 2,156 Hungary 20,300 19,597 70,003 72,408 5,170 -37,264 23,628 15,050 -2,745 8,704 -4,001 Iceland2 412 439 -128 Luxembourg 116,107 128,557 191,162 105,765 204,341 222,023 412,774 410,089 709,000 193,338 250,784 Netherlands 189,851 313,143 334,444 282,344 339,086 135,774 349,932 259,371 370,492 129,847 90,759 Poland3 9,723 18,379 21,663 13,857 11,892 12,799 18,290 7,130 2,734 11,934 6,211 Portugal 3,462 10,600 2,876 3,542 1,611 2,424 7,435 8,873 2,672 7,616 6,031 Total 430,783 497,479 687,809 481,052 585,181 318,098 855,515 714,269 1,097,285 385,235 377,790 Data excluding SPEs. Austria 10,778 4,757 25,489 7,212 9,269 2,576 10,625 3,990 5,719 9,326 3,838 Chile2 6,984 7,298 12,534 15,150 12,051 15,220 16,815 24,960 18,170 21,161 20,028 Denmark 8,552 9,306 7,269 -811 392 -9,167 11,488 418 1,050 3,471 3,643 Hungary 7,711 6,817 3,952 6,314 1,998 2,195 6,315 14,427 3,406 7,489 1,271 Iceland2 3,076 3,858 6,822 919 79 245 1,107 1,025 397 447 -136 Luxembourg 5,976 31,802 -28,266 11,194 20,667 35,661 13,302 4,423 15,368 12,074 24,600 Netherlands 39,077 13,901 119,733 5,751 38,748 -7,185 24,391 20,121 51,363 52,200 72,663 Poland3 8,207 14,576 19,855 12,279 10,043 12,800 15,953 12,441 3,626 12,532 7,438 Portugal 4,360 7,227 3,086 2,099 1,282 1,507 5,997 8,963 2,405 7,630 7,381 Total 94,720 99,544 170,474 60,109 94,528 53,852 105,994 90,768 101,504 126,330 140,726 SPEs: Austria 67,126 800 31,263 -68 1,871 -24,269 6,558 3,381 -9,483 629 1,965 Chile 320 1,363 -141 17 -291 70 148 Denmark 4,885 -7,660 3,640 -3,196 -822 -3,380 -1,890 -19,010 -445 -1,299 -1,487 Hungary 12,589 12,780 66,052 66,093 3,172 -39,458 17,313 623 -6,151 1,214 -5,272 Iceland 15 -8 8 Luxembourg 110,132 96,754 219,428 94,570 183,675 186,362 399,473 405,666 693,632 181,264 226,184 Netherlands 150,774 299,242 214,710 276,592 300,338 142,959 325,541 239,251 319,129 77,648 18,095 Poland 1,516 3,803 1,808 1,579 1,850 -1 2,337 -5,311 -892 -598 -1,227 Portugal -898 3,372 -210 1,443 329 917 1,438 -90 267 -15 -1,350 Total 346,123 409,091 536,691 437,012 490,732 264,492 750,629 624,527 995,780 258,905 237,064 Notes: All data are expressed in US dollar million. |: breaks in series; p: Preliminary data; Data are updated as of April 2016. 1. Information on resident SPEs for Estonia and Sweden (FDI flows only) is confidential. This information is not yet available separately for Canada, Ireland and Mexico. The information is available separately for Austria, Chile, Denmark, Hungary, Iceland, Korea, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom. However, the information is not displayed in the table for all countries, due to limited availability of historical data or to differences in data vintages. Resident SPEs are not present or not significant in Australia, the Czech Republic, Finland, France, Germany, Greece, Israel, Italy, Japan, New Zealand, the Slovak Republic, Slovenia, Turkey, and the United States. 2. Data for Chilean SPEs are not available from 2005 to 2008. Data for Iceland's SPEs are available from 2013 onward. 3. Data for 2015 for Poland correspond to asset/liability figures, while data for earlier years correspond to directional figures. Source: OECD calculations, OECD and IMF.
  • 41. 39 Figure 22. OECD FDI Regulatory Restrictiveness Index, 1997–2015 Notes: The OECD FDI Regulatory Restrictiveness Index gauges the restrictiveness of a country’s FDI rules across 22 economic sectors and across four types of restrictions: foreign equity restrictions; screening or approval mechanisms; restrictions on key foreign employment; and operational restrictions to FDI. Restrictions are scored on a range from 0 (open) to 1 (closed). The Index covers only statutory measures discriminating against foreign investors. Other important aspects of an investment climate (e.g. the implementation of regulations and state monopolies among other) are not considered. Country coverage expands over time. In 1997, there were 44 economies covered. In 2015, all 34 OECD countries and 25 non-OECD countries are covered, including all G20 members. Data reflects regulatory restrictions as of December each year. The increase in average scores observed for the entire sample of countries in 2012 and 2013 are mainly due to the addition of new countries (4 countries in 2012 and 1 country in 2013) for which historical scores have not been compiled. Source: OECD FDI Regulatory Restrictiveness Index database. 0.00 0.05 0.10 0.15 0.20 0.25 1997 2003 2006 2010 2011 2012 2013 2014 2015 Average OECD Average G20 All countries OECDFDIRegulatory RestrictivenessIndex (open=0;closed=1) Pace of liberalising regulatory restrictions on FDI has slowed in recent years Foreign direct investment (FDI) is a key element in international economic integration. From a broad perspective, countries have significantly liberalised restrictions on international investment over time, albeit at a slower pace more recently. Yet, there still remains significant variation across countries in terms of statutory restrictions on FDI and, worldwide, many service sectors remain partly off limits to foreign investors, holding back potential economy-wide productivity gains. In more recent periods, a few countries have also become more sensitive to investment in primary sectors, and have tightened the regime for foreign investors in these sectors (notably agriculture and mining and quarrying).
  • 42. 40 Table 23. OECD FDI Regulatory Restrictiveness Index, OECD countries per sector, 2015 Countries Total FDI Index Primary Manufacturing Electricity Distribution Transport Media Communications Financial services Business services Real estate investment Australia 0.14 0.14 0.08 0.08 0.08 0.26 0.20 0.40 0.13 0.08 0.40 Austria 0.11 0.15 1.00 0.18 0.00 0.32 0.20 Belgium 0.04 0.04 0.02 0.02 0.02 0.11 0.02 0.02 0.02 0.25 0.02 Canada 0.17 0.19 0.10 0.10 0.10 0.27 0.71 0.57 0.07 0.10 0.01 Chile 0.06 0.15 0.41 0.19 0.02 0.01 Czech Republic 0.01 0.03 0.08 0.01 0.02 Denmark 0.03 0.06 0.08 0.00 0.36 0.05 Estonia 0.02 0.02 0.15 0.00 0.15 Finland 0.02 0.02 0.01 0.08 0.01 0.09 0.01 0.01 0.01 0.05 France 0.05 0.16 0.15 0.05 0.05 0.00 Germany 0.02 0.07 0.20 0.03 0.01 Greece 0.03 0.08 0.15 0.11 0.02 0.06 Hungary 0.03 0.17 0.01 0.45 Iceland 0.17 0.24 0.11 0.56 0.11 0.20 0.11 0.11 0.12 0.11 0.24 Ireland 0.04 0.14 0.13 0.01 0.25 Israel 0.12 0.06 0.02 0.77 0.02 0.40 0.26 0.40 0.04 0.02 0.22 Italy 0.05 0.13 0.20 0.36 0.02 Japan 0.05 0.07 0.00 0.03 0.00 0.28 0.20 0.27 0.10 Korea 0.14 0.25 0.42 0.51 0.56 0.33 0.05 Luxembourg 0.00 0.08 0.00 Mexico 0.19 0.32 0.10 0.10 0.18 0.53 0.53 0.10 0.13 0.10 0.17 Netherlands 0.02 0.06 0.08 0.00 New Zealand 0.24 0.33 0.20 0.20 0.20 0.28 0.20 0.40 0.23 0.20 0.20 Norway 0.09 0.16 0.35 0.13 0.07 0.31 0.25 Poland 0.07 0.05 0.09 0.30 0.08 0.00 0.90 Portugal 0.01 0.01 0.08 0.02 Slovak Republic 0.05 0.08 0.00 1.00 Slovenia 0.01 0.15 0.00 0.01 Spain 0.02 0.01 0.08 0.23 0.00 0.11 Sweden 0.06 0.14 0.29 0.20 0.20 0.00 0.05 Switzerland 0.08 0.50 0.25 0.47 0.07 0.40 Turkey 0.06 0.01 0.38 0.20 0.13 0.55 United Kingdom 0.06 0.16 0.02 0.02 0.02 0.11 0.25 0.02 0.02 0.02 United States 0.09 0.18 0.20 0.55 0.25 0.11 0.04 OECD 0.07 0.10 0.02 0.12 0.02 0.22 0.16 0.09 0.03 0.07 0.16 Source: OECD FDI Regulatory Restrictiveness Index database.
  • 43. 41 Table 24. OECD FDI Regulatory Restrictiveness Index, Non-OECD countries per sector, 2015 Countries Total FDI Index Primary Manufacturing Electricity Distribution Transport Media Communications Financial services Business services Real estate investment Argentina 0.04 0.08 0.04 0.50 Brazil 0.10 0.19 0.03 0.03 0.03 0.28 0.55 0.03 0.11 0.03 0.03 China 0.39 0.44 0.20 0.48 0.21 0.55 1.00 0.75 0.51 0.33 0.18 Colombia 0.03 0.04 0.05 0.12 0.21 0.02 Costa Rica 0.05 0.10 0.12 0.33 0.05 0.05 0.03 Egypt 0.06 0.33 0.02 0.10 0.33 India 0.24 0.32 0.05 0.06 0.23 0.16 0.31 0.18 0.30 0.56 1.00 Indonesia 0.34 0.43 0.07 0.10 0.56 0.41 0.89 0.29 0.24 0.58 1.00 Jordan 0.30 0.16 0.10 0.10 0.62 0.75 0.46 0.10 0.23 0.41 0.85 Kazakhstan 0.14 0.23 0.05 0.05 0.05 0.33 0.55 0.40 0.10 0.05 0.05 Kyrgyzstan 0.08 0.06 0.04 0.04 0.04 0.22 0.04 0.04 0.04 0.04 0.24 Latvia 0.03 0.03 0.01 0.01 0.01 0.08 0.01 0.01 0.01 0.01 0.23 Lithuania 0.03 0.07 0.01 0.01 0.01 0.28 0.01 0.01 0.01 0.01 0.11 Malaysia 0.21 0.25 0.50 0.44 0.10 0.65 0.25 0.20 0.09 0.30 Mongolia 0.10 0.13 0.09 0.09 0.09 0.20 0.09 0.09 0.09 0.09 0.09 Morocco 0.07 0.17 0.27 0.03 0.03 0.40 Myanmar 0.37 0.40 0.31 0.14 0.21 0.38 0.64 0.11 0.68 0.21 0.46 Peru 0.08 0.05 0.05 0.05 0.05 0.43 0.30 0.05 0.05 0.05 Philippines 0.41 0.66 0.07 0.50 0.28 0.67 0.96 0.67 0.11 1.00 0.53 Romania 0.01 0.17 0.00 Russia 0.18 0.16 0.10 0.03 0.05 0.35 0.35 0.10 0.43 0.18 0.33 Saudi Arabia 0.37 0.61 0.21 0.21 0.25 0.45 0.61 0.30 0.27 0.30 1.00 South Africa 0.06 0.01 0.01 0.01 0.01 0.19 0.30 0.01 0.05 0.26 0.06 Tunisia 0.21 0.21 0.04 0.03 0.63 0.27 0.09 0.20 0.24 0.22 0.20 Ukraine 0.12 0.13 0.08 0.06 0.08 0.26 0.27 0.08 0.08 0.08 0.41 Notes: The OECD FDI Regulatory Restrictiveness Index covers only statutory measures discriminating against foreign investors (e.g. foreign equity limits, screening & approval procedures, restriction on key foreign personnel, and other operational measures). Other important aspects of an investment climate (e.g. the implementation of regulations and state monopolies among other) are not considered. All 34 OECD countries and 25 non-OECD countries are covered, including all G20 members. Data of December 2015. Source: OECD FDI Regulatory Restrictiveness Index database.
  • 44. 42 Figure 23. Inward FDI positions by major ultimate partners versus immediate partners As a share of total inward FDI position*, at end 2014 or latest available year Notes:* For 7 OECD countries which report FDI by ultimate investing country and FDI by immediate partner country to the OECD: Czech Republic, France, Germany, Iceland, Italy, Poland and the United States. Austria report inward FDI by UIC to the OECD but the data are excluded from the analysis because inward FDI by immediate counterparty is not publishable. Source: OECD Foreign Direct Investment statistics database. 0% 4% 8% 12% 16% Investing country By Ultimate counterpart By Immediate counterpart Shifting view of the origin of FDI: Investors hold investments indirectly through Luxembourg and the Netherlands Standard FDI statistics are presented according to the immediate investing country but presenting the statistics according to the country of the ultimate investor better captures where the investment in a country is coming from. These statistics show the country of the direct investor who ultimately controls the investment and, thus, bears the risks and reaps the rewards of the investment. These statistics reveal substantial differences in the distribution of inward positions by partner country. The United States, Germany, and the United Kingdom are generally found to be more important investors than the standard FDI statistics show while Luxembourg and the Netherlands are generally found to be much less important. This indicates that investors from the United States, Germany, and the United Kingdom—as well as other countries—hold their investments in other countries indirectly through Luxembourg and the Netherlands.
  • 45. 43 Table 25. Inward FDI positions by Immediate (IMD) versus Ultimate (ULT) partner country*, at end 2014 or latest available year Immediate counterpart Ultimate counterpart Total inward FDI position 5,332.7 100.0% 5,332.7 100.0% Of which from: 0.0 0.0 United Kingdom 662.4 12.4% 718.2 13.5% Germany 380.5 7.1% 535.9 10.1% United States 186.4 3.5% 518.8 9.7% Japan 418.8 7.9% 444.2 8.3% France 390.3 7.3% 432.4 8.1% The Netherlands 786.0 14.7% 375.6 7.0% Switzerland 405.1 7.6% 333.1 6.2% Canada 267.2 5.0% 317.2 5.9% Luxembourg 672.0 12.6% 228.9 4.3% Ireland 31.9 0.6% 173.9 3.3% Italy 103.3 1.9% 140.4 2.6% Belgium 208.6 3.9% 115.4 2.2% Spain 125.6 2.4% 113.2 2.1% Sweden 73.0 1.4% 79.2 1.5% Australia 51.9 1.0% 61.0 1.1% Austria 75.2 1.4% 53.0 1.0% Korea 44.5 0.8% 43.9 0.8% Norway 24.2 0.5% 39.8 0.7% Denmark 44.8 0.8% 35.4 0.7% United Arab Emirates 9.9 0.2% 33.3 0.6% Mexico 18.0 0.3% 32.7 0.6% Israel 11.3 0.2% 32.6 0.6% Bermuda -0.3 26.0 0.5% Finland 18.4 0.3% 25.9 0.5% Brazil 0.6 0.0% 23.6 0.4% Hong Kong (China) 10.4 0.2% 23.1 0.4% Singapore 24.4 0.5% 22.7 0.4% Russian Federation 11.8 0.2% 19.7 0.4% Czech Republic 3.2 0.1% 19.4 0.4% China 13.6 0.3% 16.6 0.3% India 8.5 0.2% 15.5 0.3% Saudi Arabia 0.8 0.0% 15.0 0.3% Chinese Taipei 5.9 0.1% 11.4 0.2% Poland 1.1 0.0% 10.6 0.2% Table 26. Inward FDI positions by Immediate (IMD) versus Ultimate (ULT) partner country for selected OECD countries*, at end 2014 or latest available year Inward FDI positions from: TotalWorld United Kingdom Germany United States Japan France The Netherlands Switzerland Canada Luxembourg Ireland Czech Republic IMD 122 3 16 5 1 7 31 5 0 15 0 ULT 122 5 32 9 2 7 6 3 0 4 0 France IMD 797 85 80 84 15 0 122 75 4 141 2 ULT 797 98 97 158 16 31 52 82 3 82 8 Germany IMD 957 80 0 86 26 74 226 78 1 173 11 ULT 957 132 33 208 41 70 95 71 c 79 3 Iceland** IMD 8 0 0 -3 0 0 1 0 0 7 0 ULT 8 1 0 5 0 0 0 0 0 0 0 Italy IMD 340 39 27 7 3 62 65 17 0 69 0 ULT 340 5 25 38 7 61 21 21 1 30 1 Poland IMD 209 7 34 8 1 24 36 5 0 25 2 ULT 209 12 36 21 4 23 17 4 2 11 2 United States IMD 2901 449 224 0 373 223 305 224 261 243 16 ULT 2901 466 313 80 375 240 185 152 311 24 160 Notes: All data are expressed in US dollar billion. c: confidential. *For 7 OECD countries which report FDI by Ultimate investing country and FDI by immediate partner country to the OECD: Czech Republic, France, Germany, Iceland, Italy, Poland and the United States. Austria report inward FDI by UIC to the OECD but the data are excluded from the analysis because inward FDI by immediate counterparty is not publishable. ** Data exclude resident Special Purpose Entities (SPEs). Data for France and Germany in Table 26 correspond to FDI positons at-end 2013. Data are updated as of April 2016. Source: OECD Foreign Direct Investment statistics database.
  • 46. 44 Figure 24. Domestic and Cross-Border M&A deals, 1997–2015 Source: Dealogic M&A Analytics database. 0 1000 2000 3000 4000 5000 6000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USDbln Domesticandcross borderM&As Domestic M&A Cross border M&A 0 20 40 60 80 100 120 140 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USDmln Average dealsize 0% 5% 10% 15% 20% 25% 30% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Share of EMEs intotalglobal M&As Global trends in mergers and acquisitions In 2015 the global value of mergers and acquisitions (M&A) reached USD 4.2 trillion. This was an increase by 32% compared to 2014 and one of the highest levels in the last 15 years. In general, the annual average value of M&A during the period 2008-2015 exceeded the annual average value of M&A during the period 2000-2007. In 2015, the average deal size exceeded USD 100m for the first time since 2007. Despite the fact that emerging market economies in recent years have experienced declines in capital inflows, their share of global M&A activity reached 27% in 2015, which is the highest share on record.