How difficult is to raise money in turbulent times?

This paper analyses the development of bank long-term funding over the last 13 years in Europe, US and Japan. We collected information on banks’ long-term debt issuance for the years 2000- 2012. Our sample includes all bond issues by banks headquartered in Europe, United States and Japan. We document the impact of the subprime crisis and the subsequent sovereign crisis on the volume, frequency, nature of instrument and cost of bank debt issuance practices. In particular, systemic crises deeply impacted on the cost and availability of bank long-term funding, with different effects depending on the issue’s main features and the issuing bank main business model characteristics. The macro conditions of the country in which banks operate starts to become relevant since 2011, at the onset of the EU sovereign debt crisis, though differences among nationalities are appreciated by the market even before. Indeed, markets did not fully appreciate the evaluation of credit risk made by rating agencies and did not price the bonds accordingly to their rating class.