Bond Firms See No Sign of Turnaround in Debt Issuance

A survey of major bond market firms from mid-July to mid-August found that pessimism remains high in the industry and few participants see an end in sight to the downturn in global bond issuance, with structured debt hit hardest in 2008.

Standard & Poor’s Ratings Services commissioned the survey from Massachusetts-based Business Communication Strategies for 11 categories of bonds and five categories of structured finance.

Industry estimates of 2008 bond issuance remain very pessimistic and vary more widely than they usually do. In addition, bond market professionals seem very unsure about how low issuance is going and when it will turn around.

Among the findings of the survey:

• CDO, or collateralized debt obligation, issuance is expected to plunge 89 percent in 2008 after rising 1.1 percent in 2007.
• RMBS, or residential mortgage-backed securities, are down 90 percent in 2008, with respondents expecting little recovery through the end of the year.
• Corporate bond issuance is forecasted to decline through year-end, paced by an expected 43 percent drop in speculative-grade issuance.
• Credit card-backed securities could drop 6 percent in 2008, after surging 41 percent last year.

For details, see “Bond Market Professionals See Less Global Issuance in 2008.”