In a newly released credit market research report, Fitch said t he public ABS market had $128.2 billion in new second-quarter issues which produced a first half total of $244.9 billion. Home equity receivables accounted for the bulk by far, as nearly half of all ABS issuance in the first half, or $109.3 billion, was derived from this sector, driven by record-low mortgage rates.
Likewise, Fitch said there were $236.8 billion in first-half 2003 municipal bond issues, 19.8% ahead of the same period in 2002. “Both long- and short-term issuance is expected to remain strong as states attempt to thwart existing budget shortfalls,” Fitch researchers wrote. Fitch cited a record $1.7-billion short-term issue by the state of California – intended as a short-term budget fix – as an example of the municipal issuance activity.
According to the report, domestic investment-grade corporate issuance totaled $207.4 billion in the second quarter, off 7.6% from a year earlier, while the first-half total of $457.3 billion, was also down 5.1% from a year earlier. However, high-yield debt totaled a surprising $44.3 billion, more than double 2002 second-quarter issuance.
Generally Fitch cited improving equity markets, quarterly corporate earnings and forecasts, and falling default rates for the debt market’s first-half 2003 performance.
“The moderate improvement in corporate balance sheets and default rates was met with increased investor desire for higher yielding paper, which afforded high-yield issuers broad access to the capital markets,” said Glen Grabelsky, a Fitch managing director.
The report is at http://www.fitchratings.com/corporate/reports/report.cfm?rpt_id=181326 .