Fitch U.S. Bond Market Review: Industrials Drive Issuance Boom in Q2 2007.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has published a new report offering a macro view of par rating activity and issuance patterns for the U.S. bond market through the second quarter of 2007, as well as a look at the profile of bonds scheduled to mature through 2009 by rating and industry. The par value of U.S. corporate bonds affected by upgrades totaled $34.6 billion in the second quarter, or 1.0% of market volume, while downgrades (including defaults) affected $23.8 billion in bonds (0.7% of market volume). Rating changes for the most part were concentrated at the speculative grade level. Investment grade issues in contrast experienced relatively little activity. Investment grade rating activity in total, considering both upgrades and downgrades affected less than 1% of investment grade volume. Speculative grade upgrades totaled $20.3 billion (3.3% of sector volume) while downgrades totaled $14.1 billion (2.3% of sector volume). The par value of upgrades topped downgrades across all rating categories in the second quarter, albeit by a small margin and on generally low volumes. In addition, the low level of corporate defaults continued to contribute to limited rating deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. at the 'CCC' - 'C' level with defaults affecting just $1.8 billion in U.S. bonds in the second quarter. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Fitch's U.S. High Yield Default Index, the trailing 12 month high yield default rate still remains below 1%, ending June at 0.6% and flat at 0.6% at the end of July. New issuance totaled $256 billion in the second quarter of 2007, up 11% quarter-over-quarter and 19% year-over-year (relative to 2006's second quarter issuance activity). 'The second quarter's strong results were mostly due to a very meaningful pick-up in issuance among industrials' said Paul Mancuso, Senior Director, Fitch Credit Market Research. 'Industrial new issuance totaled $112.9 billion compared with $83.8 billion in the first quarter and $71.2 billion in the second quarter of 2006.' Issuance gains were registered across the rating spectrum with both investment grade and non investment grade industrials participating. In total, 17 of the 23 industrial sectors tracked by Fitch saw a year-over-year up tick Up tick Plus tick. in issuance in the second quarter. 'Despite positive rating and issuance trends in the first half of this year, the recent dislocation dislocation, displacement of a body part, usually a bone. When a bone is dislocated, the ends of opposing bones are usually forced out of connection with one another. In the process, bruising of tissues and tearing of ligaments may occur. in the credit markets has dramatically altered the environment for U.S. bond market issuers and investors,' said Mariarosa Verde, Managing Director, Fitch Credit Market Research. 'Spreads have widened significantly since June and the market's ability to absorb projected deal volume in the second half of the year is uncertain. If funding constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. begin to negatively affect corporate fundamentals, the remainder of 2007 may look very different from the benign benign /be·nign/ (be-nin´) not malignant; not recurrent; favorable for recovery. be·nign adj. Of no danger to health, especially relating to a tumorous growth; not malignant. first half.' The par value of bonds maturing through the end of 2007 totals $194.9 billion. The bulk (95%) of this volume ($186.0 billion) consists of investment grade bonds with the remaining volume ($8.9 billion) residing at the speculative grade level. Approximately 1.3%, 3.4% and 6.1% of speculative grade volume is scheduled to mature in 2007 (six months), 2008 and 2009, respectively. As of June 30, 2007, the U.S. Corporate Bond Market totaled $3.7 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. in outstanding par value split 82% investment grade and 18% speculative grade. Across the pool of industrial bonds, the par value share of issues rated speculative grade is substantially higher at 31%. For additional information, please refer to the new report titled 'U.S. Corporate Bond Market: A Review of Second Quarter 2007 Rating and Issuance Activity,' available on the Fitch Ratings web site at www.fitchratings.com under Credit Market Research. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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