CUSIP requests indicate municipal borrowing to rise, corporate to fall

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Gerard M. Faulkner, Director of CGS Operations

CUSIP Global Services (CGS) has found a significant surge in request volume for new municipal bond identifiers, and a significant decline in request for new corporate debt identifiers in May 2020.

Its latest ‘CUSIP Issuance Trends Report’, which tracks the issuance of new security identifiers as an early indicator of debt and capital markets activity over the next quarter, found that CUSIP identifier requests for the broad category of US- and Canada-issued equity and debt totalled 4,325 in May, down 31.9% from last month.

In a year-on-year comparison, corporate CUSIP requests were up 23.8%. The May 2020 monthly volume declines were focused in US corporate debt, which fell 43.4%, US corporate equity, which was down 12.7% and certificates of deposit with maturities greater than one year, which saw a 39.9% month-over-month slowdown.

Municipal CUSIP request volume increased sharply in May for the second straight month. The aggregate total of all municipal securities – including municipal bonds, long-term and short-term notes, and commercial paper – climbed 53.1% versus April totals. This comes on top of a 12.3% increase the previous month. On an annualised basis, municipal ID request volumes are up 10.6% through May.

“If there was ever any doubt about the ability of municipal bond issuers to access liquidity during the COVID-19 pandemic, our CUSIP Issuance Trends indicator is sending a clear signal that municipalities are putting the pieces in place for a surge in new issuance volume in the weeks and months to come,” said Gerard Faulkner, director of operations for CGS. “The corporate market is telling a different story, however. With corporate CUSIP request volume slowing significantly in May, we may be seeing early signs of a slowdown in corporate debt issuance.”

Requests for international equity and debt CUSIPs both grew in May. International equity CUSIP requests were up in May and up 41.2% on a year-over-year basis. International debt CUSIPs increased 27.3% on a monthly basis and 2.0% on a year-over-year basis.

©The DESK 2020
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