D-e-a-d, if the latest data from SIFMA is anything to go by.
Global CDO issuance collapsed in the first quarter of this year, falling 94 per cent to $11,710.1bn compared with the same period in 2007.
Issuance in any currency other than dollars and euros largely dried up, while short term CDOs – defined as tranches with maturities of less than 18 months – disappeared altogether.
Other highlights from SIFMA’s latest Research Quarterly:
- Total securities issuance in the first quarter of 2008 reached $1,430bn, an increase from the $1,360bn Q4 of 2007 but substantially lower than the $1,810bn issued in Q1.
- Short- and long-term municipal issuance totaled $89.2bn in Q1, below the record $114bn issued in the same period last year.
- Issuance in the agency debt market surged as the “private-label” conforming loan market for MBS stalled. Agency mortgage-related issuance accounted for over 95 per cent of the first quarter volume.
- ABS issuance declined by 39.8 per cent to $57.5bn from Q4′s historically low volume of $94.7bn. The reduced volume is largely attributed to conditions in the subprime and home equity loan sectors, SIFMA said.- Credit card ABS has become the largest issuing ABS sector at $28.1bn in the first quarter, an increase of 14.4 per cent from the fourth quarter of 2007.- Total corporate bond issuance was $205bn in the first quarter, a decline of around 15 per cent from the fourth quarter of the record-setting 2007, with investment grade issuance accounting for over 90 per cent of the first quarter volume.
- Total net issuance of US Treasury securities was $190.9bn in the first quarter of 2008, as a rising projected budget deficit projection increased the Federal government’s funding requirements, SIFMA said. Gross coupon issuance rose by 8.1 per cent during the first quarter.
But might there yet be some light at the end of this tunnel? Maybe:
Federal Reserve actions since the first of the year have had the effect of enhancing market liquidity. Over the past month, we have seen some improvement in market conditions as demonstrated by reduced volatility and a financial asset price rebound at the end of the quarter
And:
Since the end of the first quarter, there indeed has been evidence of increased market stability supported by progress in bank loss recognition and capital replenishment. This is contributing to signs of renewed investor confidence, setting the stage for increased capital market issuance in the second quarter
As for those CDOs, however – it’s not looking good.