CUSIP Request Volume Signals Sluggish Pace of Corporate and Muni Bond Issuance

 CUSIP Global Services (CGS) has  announced the release of its CUSIP Issuance Trends Report for October 2017. The report, which tracks the issuance of new security identifiers as an early indicator of debt and capital markets activity, found mixed results this month. Pre-trade requests for new corporate debt identifiers decreased in October, while requests for new corporate equity and municipal bond identifiers saw some increases. This is suggestive of a continued sluggish pace of new security issuance in the fourth quarter of 2017.

 CUSIP identifier requests for the broad category of U.S. and Canadian corporate offerings, which includes both equity and debt, totaled 4,114 in October, down 0.2% from September, driven primarily by a 19% decline in requests for new corporate debt identifiers. By contrast, requests for corporate equity identifiers increased 36% during the month of October. So far this year, demand for new CUSIPs for both corporate debt and equity offerings are up 20% over the same period in 2016.

Municipal CUSIP requests increased in October. A total of 1,018 municipal bond identifier requests were made during the month, an increase of 9% from September. On a year-over-year basis, however, municipal request volume was down 25% through the end of October 2017, reflecting ongoing volatility in municipal issuance volumes over the course of this year.

“While we are seeing some month-to-month pockets of growth in municipal bond and corporate equity asset classes, the overall pace of pre-market activity in October is best categorized as sluggish,” said Gerard Faulkner, Director of Operations for CUSIP Global Services. “This pattern of on-again/off-again monthly volume ebbs and flows has been consistent this year amid a great deal of macroeconomic and geopolitical uncertainty.”

International debt and equity CUSIP International Numbers (CINS) volume were also mixed in October. International equity CINS were essentially flat, growing 1.2% during the month, and international debt CINS increased 13% during the month. On a year-over-year basis, international equity requests were down 12% and international debt requests were up 46%, reflecting continued volatility in international markets.

“There is an alchemy to new security issuance that involves equal parts macroeconomics, politics, and routine funding needs of corporations and municipalities,” said Richard Peterson, Senior Director, S&P Global Market Intelligence. “As those three variables continue to fluctuate over the course of the year, we’re seeing those same undulations in the pre-trade market where issuers are readying new instruments to bring to market. We expect that general sense of cautiousness to pervade new issuance activity for the near-term.”

To view a copy of the full CUSIP Issuance Trends report, please click here.

Following is a breakdown of New CUSIP Identifier requests by asset class year-to-date, through October 2017:

Asset Class

2017 ytd

2016 ytd

YOY Change

International Debt

3270

2247

45.5%

CDs < 1 yr Maturity

5182

3706

39.8%

Long Term Municipal Notes

533

443

20.3%

U.S. & Canada Corporates 

22,613

18,812

20.2%

Private Placement Securities

2501

2294

9.0%

Short Term Municipal Notes

1011

976

3.6%

CDs > 1 yr Maturity

7041

6886

2.3%

International Equity

1573

1781

-11.7%

Municipal Bonds

10,218

13,583

-24.8%