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2004Complete report (41 KB PDF)
Medium-Term Notes (MTNs) outstanding at the end of 2004 totaled $639 billion, up from $556 billion in 2003 (table 1). The growth of MTNs outstanding exceeded that of corporate bonds, and the ratio of MTNs outstanding to the sum of MTNs and bonds outstanding increased from 12 percent to 13 percent. Outstandings at financial corporations continued to trend up and were $90 billion higher than in 2003. The largest increase was again at non-auto finance companies, where outstandings rose more than $40 billion; the second-largest increase was $29 billion in the "other" category, which consists of insurance and real estate firms and miscellaneous investing institutions. Most other financial sectors also showed an increase in MTNs outstanding; the exceptions were the auto finance and commercial bank sectors. In contrast to outstandings at financial corporations, those at nonfinancial corporations decreased $6 billion, continuing the downward trend from their peak in 1999. Among nonfinancial firms, the levels of outstandings declined slightly across the board.
Despite the overall increase in outstandings, the total number of MTN programs continued to decrease in 2004, falling to 440, the lowest number since 1997 (table 2). The number of financial MTN programs rose from 185 in 2003 to 198 in 2004, mostly because of increases in asset-backed and other financial institutions. However, the number of nonfinancial MTN programs fell sharply, from 257 in 2003 to 242 in 2004, the lowest number recorded. The largest decreases, at 5 programs each, were in the manufacturing and the electric, gas, and water categories. Since 1993, manufacturing has lost, on balance, 18 programs, the most of any nonfinancial sector.
By rating, AAA-rated MTNs outstanding recorded the largest net increase in 2004, and the vast majority of total MTNs outstanding continued to be rated investment grade (those rated BBB or higher) (table 3). Outstanding speculative-grade MTNs (those rated BB or lower and those not rated) increased slightly but accounted for only 3 percent of total outstandings.
As is consistent with the increase in MTNs outstanding, gross issuance remained elevated at $295 billion in 2004 (table 4). In the financial sector, gross issuance by commercial banks and asset-backed firms decreased $40 billion collectively, but the increase in issuance by the finance companies, securities brokers, and firms in the "other" category more than made up for the difference. Gross issuance by nonfinancial corporations continued to slide, falling 50 percent from the level in 2003, to about $7 billion.
The total number of issuers of MTNs fell from 141 in 2003 to 132 in 2004, mainly because of the sharp decline in the number of nonfinancial issuers (table 5). On net, there were 9 more financial issuers in 2004 than in 2003. In particular, a rise in the number of issuers in the asset-backed and the "other" categories--an increase of 15--offset the 6 fewer issuers in the commercial banking sector. The number of issuers in other financial groups remained stable. The number of MTN issuers in the nonfinancial sector fell by 18 in 2004. The manufacturing and the electric, gas, and water groups lost roughly half of their total number of issuers from the previous year. The ratings distribution of MTN issuance in 2004 was similar to that of MTNs outstanding (table 6). Investment-grade firms accounted for the majority of the issuance, while speculative-grade firms accounted for only 3 percent of total MTN issuance.