Municipal borrowers prepare for new issuance surge as CUSIP request volume climbs for second straight month

CUSIP Global Services (CGS) has reported a surge in request volume for new municipal securities identifiers, and a decline in such requests for corporate debt issuers.

The CUSIP Issuance Trends Report for May 2020 tracked the issuance of new security identifiers as an early indicator of debt and capital markets activity over the next quarter.

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 per cent compared to April’s totals. This came on top of a 12.3 per cent increase the previous month. On an annualised basis, municipal ID request volumes were up 10.6 per cent 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,” says 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.” 

The broad category of US- and Canada-issued equity and debt totalled 4,325 in May, down 31.9 per cent from last month. On a year-over-year basis, corporate CUSIP requests were up 23.8 per cent. The May 2020 monthly volume declines were focused in U.S. corporate debt, which fell 43.4 per cent, US corporate equity, which was down 12.7 per cent and certificates of deposit with maturities greater than one year, which saw a 39.9 per cent month-over-month slowdown.

Requests for international equity and debt CUSIPs both grew in May. International equity CUSIP requests were up in May and up 41.2 per cent on a year-over-year basis. International debt CUSIPs increased 27.3 per cent on a monthly basis and 2 per cent on a year-over-year basis.