* Developing country corporate bond issues pick up in Q4
* Financial flows return to late 1990s conditions
GENEVA, Jan 22 (Reuters) - Corporate bond issuance and bank lending in developing countries appears to be picking up again after shrinking sharply during the crisis, a World Bank official said on Friday.
Andrew Burns, a lead author on the bank's just-released Global Economic Prospects report, said that financial flows to developing countries fell to about 2.5 percent of gross domestic product in 2009 from a record of more than 8 percent in 2007.
While lending to sovereign borrowers through the bond market had continued, bank lending and private sector bond issuance had dried up almost entirely, said Burns, who works in the bank's development prospects group.
In the fourth quarter of last year there was a revival of both corporate issues and lending, Burns told a seminar at the World Trade Organisation.
"There does seem to be a strengthening, a recovery of interest," Burns said. "Looking forward, we expect that these capital flows are going to recover in the course of 2010."
This modest recovery would take financial flows to about 3 percent of GDP this year, he said.
Burns described this as a return to a "new normal", with a resumption of the conditions of the late 1990s, before the boom which preceded the financial crisis.
The U.N. Conference on Trade and Development said on Jan. 19 that flows of foreign direct investment to developing countries could start to grow again after a 35 percent drop to $406 billion in 2009 ended six years of expansion. [ID:nLDE60H1AN]
The World Bank's Global Economic Prospects, issued Jan. 20, said a modest recovery was underway after the crisis but could lose steam, while developing countries faced stiffer borrowing costs, reduced credit and capital flows. [ID:nN20130978] (Reporting by Jonathan Lynn; Editing by Noah Barkin)