US bond issuance down due to US election, rates - Cusip
14th February, 2017|Merle Crichton
Cusip Issuer Services short term muni note orders dropped 30% year-on-year
The main US issuer of bond identifiers has blamed the US election and rising interest rates for a prolonged slowdown in the number of new bonds as it reported fewer issues for the third consecutive month.
New York-based Cusip Global Services reported on Monday a January slowdown in the issuance of corporate and municipal bonds for the third consecutivemonth, with a total of 993 municipal requests, a 4.9% decline year-on-year.
"The decrease in the past three months in Cusip issuance for US corporate and municipal debt could be due to uncertainty around the US election and an uptick in interest rates near the end of the year," said Gerard Faulkner, director of operations for Cusip Global Services.
"In addition, Cusip issuance for US municipal debt declined towards the end of the year as municipal issuers stepped back after a strong pace of new issuance earlier in the year."
Municipal bond orders dropped 9.2% to 826 last month from910 in January last year, the fewest orders since February 2013 when 819 requests were processed.
"Despite strong debt issuance in terms of dollar amount throughout January, Cusip request volume is clearly signalling a slowdown in the total number of offerings on tap as we head into 2017," said Faulkner.
Corporate securities Cusip orders begun the yearwith a total of 3,815 requests, up 22.8% from 3106 handled inthe first month of 2016. It represents the highest number of corporate Cusip orders for the month of January since 2009 (4,011 requests).
Cusip request volume for US & Canada equity identifierssurged to 2160, representing a 45.3% increase year-on-year and also its highestmonthly level in nearly four years.
"The surge in US equity issuance was due to an increase in requests for new mutual fund share classes relating to the new US Department of Labor Fiduciary Rule, along with relief from the US Securities and Exchange Commission (SEC) for mutual funds in filing the new class shares," said Faulkner.
The new fund structure complies with the Fiduciary Rule. Faulkner added: "The uptick in Cusip issuance for the new mutual fund share classes may continue during the first quarter."
