Jan 17 Reuters European debt sales have had their fastest start to the year on record as governments and financial institutions take advantage of borrowing costs falling from multiyear highs.

Borrowers raised 170 billion euros 184 billion in the first two weeks of 2023 from euro and sterling bond sales, Refinitiv data showed, the highest amount sold over this period on record going back to 2000.

A sharp drop in gas prices, hopes that inflation is peaking and that a recession may be milder than expected have boosted sentiment.

Borrowing costs, notching their biggest jumps on record in 2022, have fallen sharply in January. Germany39;s 10year bond yield has dropped nearly 40 basis points, eyeing the biggest monthly drop since July .

Euro investmentgrade corporate bond yields are down 30 bps and the cost of insuring subinvestment grade debt exposure touched the lowest since April. 

This huge amount of borrowing happening tells me that the markets are in good shape, and there39;s very strong demand for fixed income, said Chris Iggo, chief investment officer for core investments at AXA Investment Managers.

Behind the record is a sharp rise in debt sales from financial institutions. Chunky debt sales from lenders such as Santander and Societe Generale drove issuance of 52 billion euros in the first two weeks of the year, doubling from 2022.

Analysts noted that as banks sell debt more frequently to fund their balance sheets, they have more of an incentive to take…