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Declines on the Rise

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Peering at projections for 2008 may make one a bit uneasy. For example, the Securities Industry and Financial Markets Association (SIFMA) 2008 U.S. Market Outlook estimate large declines. The forecast projects a median 15% decline in fixed-income issuance this year, to $3.4 trillion from the estimated $4.0 trillion issued in 2007. Also, corporate bond issuance is expected to be $965 billion, near historically high levels, although that figure reflects a 14.8% decline from 2007 issuance levels. Furthermore, high-yield and investment-grade issuance are both expected to fall around 15% in 2008, to $115 billion and $850 billion, respectively.

According to the report, asset-backed securities (ABS) issuance is expected to decline by 36% in 2008, to $325 billion from $507 billion in 2007, and home equity loans, previously the largest component in the ABS sector, are projected to experience a 72% decline, from $222 billion to $63 billion, “attributable to depressed pricing as credit spreads remain at historically wide levels.” Credit card receivables are projected to replace home equity loans as the largest ABS sector, at $90 billion in 2008, a fall from the record level of $95 billion in 2007.–Kara P. Stapleton


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