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

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Medium-term notes (MTNs) outstanding at the end of 2005 totaled $713 billion, up from $639 billion in 2004 (table 1). Outstandings for financial corporations accounted for about 90 percent of total outstandings in 2005 and continued to trend up, increasing $81 billion. The largest increase in outstanding MTNs among financial corporations--more than $30 billion--was at non-auto finance companies; the second-largest increase, $25 billion, was 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, outstandings for nonfinancial corporations decreased $7.5 billion, and the decline continues the downward trend from the peak in 1999. Among nonfinancial corporations, the levels of outstandings declined for most categories. However, service companies and transportation, mining, and construction companies were the two categories that experienced slight increases.

Despite the overall increase in outstandings, the total number of MTN programs continued to shrink in 2005, falling to 413, the lowest number since 1996 (table 2). The number of financial MTN programs fell slightly, from 198 in 2004 to 192 in 2005, mostly because of decreases in the numbers of programs at commercial banks and other financial institutions. In contrast to the broad trend, asset-backed MTN programs have continued to grow. The number of nonfinancial MTN programs fell to a record low of 221 in 2005, a sharp drop from 242 in 2004. The number of MTN programs for manufacturing dropped from 86 in 2004 to 76 in 2005, the largest decline among all the categories. Other notable program decreases, at 5 each, occurred in the categories for telephone and communication and for electric, gas, and water.

The vast majority of total MTNs outstanding continued to be rated investment-grade--that is, those rated BBB or higher (table 3). In 2005, AAA-rated MTNs outstanding jumped $54 billion, and AA-rated MTNs outstanding rose $28 billion. Largely because of the downgrade in rating status of a large financial issuer from A to BB, outstandings of A-rated programs fell $53 billion and outstandings of BB-rated MTNs jumped $31 billion. Outstandings of speculative-grade MTNs (those rated BB or lower and those not rated) rose $40 billion. Outstandings by rating status for financial corporations closely resembled the pattern for overall outstandings, while those for nonfinancial corporations declined slightly for most rating groups.

Gross issuance of MTNs edged down from a robust $295 billion in 2004 to $285 billion in 2005 (table 4), mainly because of a slowdown of issuance by financial corporations. Issuance by securities brokers dropped $20 billion in 2005, and issuance by automobile and other finance companies fell $15 billion collectively. The decreases were partly offset by increases in issuance by commercial banks, asset-backed firms, and other financial corporations. Gross issuance by nonfinancial corporations increased slightly more than $500 million in 2005.

The total number of issuers of MTNs fell again, down to 122 in 2005 from 132 in 2004 (table 5). For financial corporations, the 2005 decline was nine; the largest two decreases were in auto finance companies and "other" financial corporations. For nonfinancial MTNs, the decrease was one in 2005 after a drop of eighteen in 2004. The ratings distribution of MTN issuance in 2005 (table 6) mirrors that of MTNs outstandings.

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