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PUBLIC SECURITIES ASSOCIATION RELEASES YEAR-END DATA

 PUBLIC SECURITIES ASSOCIATION RELEASES YEAR-END DATA
 NEW YORK, Dec. 13 /PRNewswire/ -- The Public Securities Association


(PSA) today released the following:
 The PSA has compiled year-end data on the fixed income markets that it believes will be of use to bond writers.
 Here are some highlights:
 Municipal Securities
 -- Long term municipal volume surged in 1991, a result of both the decline in interest rates and the pent-up demand for capital. Through November, issuance totaled $146 billion and with issuance expected to be heavy in December, volume is poised to total $160 billion for the year, the second highest level since the peak year of 1985 when $222 billion was issued.
 Projected 1992 Volume -- $173 billion
 -- Short term volume is also headed for record levels, due to cash flow difficulties experienced by state and local governments. Corporate, personal and sales tax revenues have declined during the recent recession, which has been more severe than expected. Issuance through November totaled $38 billion and is expected to exceed $40 billion for the year. This is second only to short term issuance of $44.8 billion in 1982, a year in which the Department of Housing and Urban Development was actively issuing housing and urban development notes. These sales were discontinued in 1984.
 Projected 1992 Volume -- $44 billion
 -- Insured volume continued to increase in 1991 and is already at the second highest level ever. Municipal issued backed by bond insurance totaled $44.2 billion through November and by year-end insured volume will total close to $48 billion, second only to 1985's total of $51.2 billion insured. The insured portion of the market currently represents 30 percent of the market, and is expected to continue to grow in the future as debt is increasingly sold to retail investors, the investor segment which values insurance the most.
 Projected 1992 Volume -- $57 billion
 -- Infrastructure financings for new investment purposes are expected to total a record $51 billion in 1991, as state and local governments continue to address infrastructure investment needs. In addition, Federal programs have had a positive effect on the level of infrastructure financings. The State Revolving Fund program, established by the Water Quality Act of 1987 has caused issuance for wastewater treatment purposes to increase substantially in recent years. In addition, the recent passage of the Intermodal Surface Transportation Efficiency Act of 1991 should result in increased infrastructure bond issuance as states raise funds to meet their 20 percent portion of total project costs.
 Projected 1992 Volume -- $62 billion
 -- Individual investors and their proxies, mutual and money market funds, continued to be the largest buyers of municipal bonds, acquiring approximately 70 to 80 percent of the new supply in 1991. Currently individual investors hold more than $545 billion of municipal securities, representing almost 65 percent of the securities outstanding.
 Mortgage-Backed Securities Highlights
 Pass Throughs
 -- Pass-through issuance totaled $193.2 billion through September and is expected to reach $260 billion for all of 1991, second only to the record volume of 1986. The declining interest rate environment seen in 1991 has influenced homeowners to refinance existing mortgages, which in turn has caused pre-payments to increase. As new mortgages are originated and securitized, the volume of pass-throughs increases, a trend that should continue into 1992.
 Projected 1992 Volume -- Based on the current level of interest rates, agency pass-through issuance should total between $280 and $300 billion next year.
 -- FNMA once again dominated the pass-through market in 1991, and by year-end is expected to issue more than $106 billion in securities, or 41 percent of all agency pass-through issuance. FHLMC is expected to issue $90 billion for all of 1991, representing 35 percent of the total, while GNMA is expected to issue $63 billion, accounting for 24 percent.
 REMIC/CMO Issuance.
 -- Issuance of these REMIC and CMOs totalled $127.3 billion in the first nine months of 1991. New issuance is projected to total $180 billion for the year, far exceeding last year's record $110 billion.
 Projected 1992 Issuance - Issuance of REMIC/CMO securities is expected to remain strong in 1992. Volume could total $200 billion for the year.
 -- FNMA continued to increase their dominance in the issuance of REMIC securities and is expected to issue over $100 billion in 1991, accounting for 55 percent of the total supply.
 -- FHLMC is expected to issue $70 billion in REMICs for all of 1991, representing 39 percent of the total.
 -- Private label CMOs are expected to total $11 billion for the year, or 6 percent of the total.
 Asset Backed Securities
 -- Issuance of asset backed securities totalled $43.8 billion through November and the full year total is expected to reach $44 billion, a new record. Securitization is expected to continue to grow in popularity in the future, as banks and financial institutions, or any other entities with financial receivables, use securitization to lower their cost of financing, increase liquidity or improve their balance sheet.
 Projected 1992 Volume -- Issuance is expected to exceed $55 billion in 1992.
 -- Securities backed by credit card receivables totalled $16.6 billion through November, and are expected to total $18 billion for all of 1991, slightly less than $20.4 billion seen in 1990. Issuance of credit card securities was negatively impacted by a legislative amendment passed by the Senate in mid-November, which would have imposed an interest rate cap on consumer credit card loans. This had a chilling effect on the credit card-backed sector of the market. Pending deals were cancelled or postponed, and prices on outstanding issues dropped precipitously. As support for the amendment evaporated, the market recovered somewhat but investors remain cautious of the potential risk of legislation.
 -- Auto loan asset backeds totalled $15.6 billion through November, and are expected to account for over $16.5 billion of issuance for all of 1991, up 34 percent from last year.
 -- Home-equity loan backed securities accounted for over $10 billion of issuance through November. Issuance for all of 1991 is expected to reach $11 billion, double the level of $5.5 billion last year.
 U.S. Treasury Securities
 -- The U.S. Treasury issued record amounts of marketable securities in 1991 and by year-end sales are expected to total in excess of $1.7 trillion. Through September, sales totalled almost $1.3 trillion, representing $194 billion of new cash and rollovers of $1.1 trillion.
 Sources: IDD/PSA Municipal Data Base; IDD Information Services; GNMA, FNMA, FHLMC; U.S. Treasury.
 -0- 12/13/91
 /CONTACT: Caroline Benn, 212-440-9427, or Joe Sims, 212-440-9426, or Andy Nybo, 212-440-9413, all of Public Securities Association/ CO: Public Securities Association ST: New York IN: SU: SM-TS -- NY014 -- 2310 12/13/91 10:44 EST
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Date:Dec 13, 1991
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