Total bond issuance and bank loans by national, regional, and local governments is estimated to hit $4.8 trillion (all U.S. dollars) in 2005, 3% higher than in 2004, says Standard & Poor’s Ratings Services.

In its first global survey of government borrowing, published Thursday, S&P says Canada is one of the few countries borrowing less.

S&P estimates that global borrowing by sovereigns alone will reach $4.1 trillion in 2005, up 5% from $4.0 trillion in 2004. It reports that the world’s largest issuer will remain Japan at $1.7 trillion.

“[Japan’s] 2005 borrowing requirement will rise 8% from 2004, as the Japanese government turns more to market sources for its funding requirements,” S&P says.

“On the other hand, the second largest global borrower, the U.S. government, is expected to see its borrowing requirement fall by just less than 6% to $806 billion, as the result of a modest fiscal adjustment.”

Global sovereign borrowing should also increase due to a projected 5% increase in European sovereign borrowing to $1.3 trillion, and a projected 36% increase in Latin American sovereign debt to $169 billion, S&P adds.

“Conversely, Canada and the Middle Eastern governments should see 2005 borrowing requirements fall due to continued fiscal rectitude,” it notes.

Worldwide debt issuance by regional and local governments should fall 6% to an estimated $671 billion in 2005 from $713 billion in 2004, S&P predicts. “State and local governments in the U.S. continue to be the largest borrowers (an estimated $330 billion), followed by regional and local governments in Europe ($178 billion), Japan ($72 billion), Canada ($44 billion), and India ($30 billion),” it notes.

“Apart from Canada and Australia — where foreign-currency-denominated borrowing is significant, albeit on a declining
trend — borrowing by regional and local government issuers is overwhelmingly in local currencies. As a source of financing, bank lending remains important in a number of countries, notably in Europe,” it adds.