U.S. corporations issued $114.4 billion of medium-term notes (MTNs) in 1997, up from $93.7 billion in 1996 (table 1.A). The faster pace of issuance is mainly attributable to financial firms, which sold $98.9 billion in 1997, $16.9 billion more than in 1996. Issuance by nonfinancial firms also increased, but by only $3.9 billion. A total of 158 firms sold MTNs in 1997, down from 165 in 1996 (table 1.B). During 1997, total MTNs outstanding rose $30.2 billion, to $317.5 billion (tables 2.A and 3). This increase was more than accounted for by financial firms, for which outstandings increased $48.2 billion, to $242.7 billion. Outstandings for nonfinancial firms fell $18.0 billion, to $74.8 billion.

Corporations that issued MTNs in 1997 continued to have good credit ratings (table 5.A). As in 1996, almost 99 percent of the total amount of MTNs issued had an investment-grade rating of Baa or better. Single-A-rated issuers were again the most common, and their issuance accounted for 60 percent of total gross issuance, down from 65 percent in 1996. Issuers with a AA rating saw their share of gross issuance rise, from 13 percent to 25 percent. Only six issuers had a speculative-grade credit rating last year (table 5.B). As the amount of speculative-grade issuance has always been small, outstanding MTN debt is predominantly investment grade (table 6.A).

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). As shown in table 7, in 1997 this share was 47 percent for all U.S. corporations, with a higher share of 62 percent for financial firms and a lower share of 18 percent for nonfinancial firms. For both financial and nonfinancial firms the MTN share increased from 1996 levels. Similarly, the ratio of outstanding MTN debt as a percent of total corporate outstanding debt (MTNs plus corporate bonds) edged up, from 18 percent to 19 percent (table 8).

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