Baltic corporate bond market after Covid-2019 and capital markets union actions

The implementation of the Capital Markets Union (CMU) initiative has boosted the activity within the corporate bond markets, a momentum further augmented by the consequences of the COVID-2019 pandemic. Although Baltic countries initially ranked low in the development of individual capital markets during 2007-2014, (before the CMU plan), the situation improved in the period 2015-2018 (after the CMU actions). The further expansion of the Baltic corporate bond market in the period from 2019 to 2023 traditionally associated with COVID-2019 and further CMU activities; witnessed an average annual growth rate of 125%. This paper aims to investigate the impact of COVID-2019 and CMU-related factors on companies' decisions to issue corporate bonds in the Baltic region. This article undertakes a primary data analysis collected through surveys and in depth interviews conducted between December 2022 and January 2023, involving Baltic corporate bond issuers and issue organisers. The results indicated that while bank borrowing remained popular, issuing corporate bonds was gaining favour among the Baltic issuers. The cost of funding was named as the main motivating factor for the bond issuance, followed by the strategic ambition to be present in the public market, and lack of funding alternative. The European Union's support for bond issuance costs was treated as beneficial, reinforcing the impact of the CMU. The identification of liquidity and investor demand as primary obstacles in Baltic corporate bond issuance further supported the ongoing CMU efforts. Methodologically, this study employs scientific publication analysis, document analysis, expert surveys, and in-depth interviews.