Federal Reserve Statistical Release, Corporate Medium-Term Notes; title with eagle logo links to Statistical Release home page

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1998 complete report (33 KB PDF) | Tables (17 KB PDF)

U.S. corporations issued $150 billion of medium-term notes (MTNs) in 1998, a sharp increase from $114 billion in 1997 (table 1.A). Issuance by financial firms reached nearly $130 billion in 1998, and issuance by financial firms rose to $20 billion. A total of 145 firms sold MTNs in 1998, down from 158 in 1997 (table 1.B). Year-end MTNs outstanding rose $62 billion in 1998, to $380 billion (tables 2.A and 3). The increase was largely accounted for by the $56 billion rise in outstandings at financial firms, to nearly $300 billion. Outstandings for nonfinancial firms increased $6 billion, to $81 billion, after having declined for the previous two years.

The rating of borrowers in the corporate MTN market has always been predominantly investment-grade (tables 5 and 6). As in 1997, roughly 99 percent of total MTN issuance had a rating of Baa or better (table 5.A). Single-A-rated issuers were again the most common, accounting for 58 percent of total gross issuance, down from 60 percent in 1997. The share of issuers with a AA rating remained stable at 25 percent. Only one issuer had a speculative-grade credit rating last year (table 5.B).

The MTN market accounts for a sizable share of intermediate and long-term borrowing by U.S. companies. One measure of the MTN market share is the volume of MTN issuance as a percent of total public issuance of investment-grade debt (MTNs plus corporate bonds). For all U.S. corporations, this measure of share was 43 percent in 1998, down from 47 percent in 1997 (table 7); for financial firms, it was 61 percent, down only slightly from 62 percent in 1997; and for nonfinancial firms, it was 15 percent, down substantially from 20 percent in 1997. Similarly, the ratio of outstanding MTN debt as a share of total corporate outstanding debt (MTNs plus corporate bonds) declined slightly over the year, from 19 percent to 15 percent (table 8).

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