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2006Complete report (14 KB PDF)
Medium-term notes (MTNs) outstanding at the end of 2006 totaled $870 billion, up from $713 billion in 2005 (table 1). Outstandings for financial corporations accounted for slightly over 90 percent of total outstandings in 2006 and continued to trend up, increasing $155 billion. The largest increase in MTNs outstanding among financial corporations--more than $45 billion--was in the "other" category, which consists of insurance and real estate firms and miscellaneous investing institutions; the second-largest increase, $42 billion, was in asset-backed programs. Most other financial sectors also showed an increase in MTNs outstanding; the exceptions were in the sectors of automobile finance and other depository institutions (not commercial banks). For the first time since 1999, outstandings for nonfinancial corporations posted a modest increase of $1.8 billion, mostly due to the continued growth--$4 billion--in outstandings among services firms. Outstandings for the telephone and communications sector also rose a bit, but all other categories showed small declines.
Despite the overall increase in outstandings, the total number of MTN programs continued to shrink in 2006, falling to 389, the lowest number since 1994 (table 2). The number of financial MTN programs fell slightly, from 192 in 2005 to 183 in 2006, mostly because of decreases in the numbers of programs at commercial banks and non-auto financial institutions. The numbers of programs in other sectors mostly held steady. The number of nonfinancial MTN programs fell 15, to a record low of 206, mostly because of the contraction in the categories for electric, gas, and water and for manufacturing. All other categories saw decreases of 1 or 2 programs each.
Investment-grade programs--those rated BBB and higher--continued to account for the vast majority of total MTNs outstanding (table 3). In terms of changes, AAA- and A-rated MTNs outstanding jumped $55 billion and $93 billion, respectively, while both AA- and BBB-rated MTNs outstanding decreased moderately. Outstandings of speculative-grade MTNs (those rated BB or lower and those not rated) decreased $31.6 billion, largely due to a sharp decline in a BB-rated program. Changes in outstandings by rating status for financial corporations closely resembled the pattern for overall outstandings. For nonfinancial corporations, outstandings of investment-grade programs increased for all but the BBB-rated category, and outstandings of speculative-grade programs declined.
Gross issuance of MTNs rebounded strongly from $285 billion in 2005 to $392 billion in 2006 (table 4). Among financial programs, issuance by asset-backed programs more than doubled, and issuance by securities brokers and "other" sectors also posted significant gains. By contrast, issuance by the automobile finance programs fell by nearly half. Gross issuance by nonfinancial corporations nearly doubled its 2005 level. Aside from the transportation, mining, and construction sector, which saw issuance fall sharply to its record low, all other sectors of nonfinancial firms posted notable increases.
The total number of MTN issuers fell again in 2006, down to 109 from 122 in 2005 (table 5). For financial corporations, the 2006 decline was 7, largely due to reductions in the number of commercial banks and securities brokers that issue MTNs. For nonfinancial MTNs, the decrease was 6, led by electric, gas, and water companies. The ratings distribution of MTN issuance in 2006 (table 6) generally mirrors that of MTNs outstanding with the exception of a small increase in BBB-rated issuance compared to a notable decline in BBB-rated outstandings.