CUSIP Requests Show Third Monthly Decline In Corporate And Muni Bond Volume - Fiduciary Rule Drives Surge In New Equity Instrument Creation

CUSIP Global Services (CGS) today announced the release of its CUSIP Issuance Trends Report for January 2017. The report, which tracks the issuance of new security identifiers as an early indicator of debt and capital markets activity, found a notable slowdown in the pre-trade market for corporate and municipal bonds for the third straight month in January. Conversely, CUSIP request volume for domestic equity identifiers surged to its highest monthly level in nearly 4 years, reflecting a sharp uptick in a new class of shares issued by mutual funds to comply with the Department of Labor Fiduciary Rule.

CUSIP identifier requests for U.S. and Canadian corporate debt and equity offerings totaled 2,160 in January, a 6% increase from December 2016 totals.  This growth was driven largely by a surge in requests for new corporate equity CUSIPs.  A total of 1,155 new domestic corporate equity CUSIPs were requested during the month, the highest level since May of 2013.  Meanwhile, requests for domestic corporate debt CUSIP identifiers totaled just 593, the lowest monthly volume since January of 2016. On a year-over-year basis, corporate debt and equity CUSIP requests for the Americas were up 45% versus 2016.

Municipal bond requests fell for the third straight month in January, with just 826 muni identifier requests processed in the month, an 8% decline from December levels.  On a year-over-year basis, municipal bond request volume was down 9% through the end of January 2017.

“Despite strong debt issuance in terms of dollar amount throughout January, CUSIP request volume is clearly signaling a slowdown in the total number of offerings on tap as we head into 2017,” said Gerard Faulkner, Director of Operations for CUSIP Global Services. “In terms of equity markets, a great deal of the surge we’re seeing in new equity CUSIP requests is being driven by an increase in activity among mutual funds who have had to issue new classes of shares to get into compliance with the Fiduciary Rule. That volume will likely even out over the next 1-2 months.”

International debt and equity CUSIP International Numbers (CINS) volume were mixed again in January.  International equity CINS decreased 17%, while international debt CINS increased 13% during the month. On a year-over-year basis, international equity requests were up 5% and international debt requests were up 92%, reflecting continued volatility in international markets.

“At least for the immediate future, all signs appear to be pointing to a slowdown in corporate and municipal debt issuance,” said Richard Peterson, Senior Director, S&P Global Market Intelligence. “While that sentiment is reflected in current investor behavior, it will be instructive to watch the CUSIP issuance dataset for any signs of a potential change in the coming weeks and months.”

To view a copy of the full CUSIP Issuance Trends report, please click here.  

Following is a breakdown of New CUSIP Identifier requests by asset class year-to-date, through January 2017: