capital markets deck 2017 - sifma · • long-term or notes (one year to 10 years) and bonds (over...

U.S. CAPITAL MARKETS DECK

SIFMA RESEARCH

SEPTEMBER 2017

IntroductionThe United States has the largest and deepest capital markets in the world –according to the Federal Reserve, capital markets provide almost 80% of debt financing for businesses in the U.S. The securities industry facilitates access to those markets, creating investor opportunity, capital formation, job creation and economic growth.

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• U.S. stock market market capitalization – the total value of publicly traded domestic companies –was $27.4 trillion as of end-2016.

• Over 100 companies conducted initial public offerings in the U.S. in 2016 raising over $17.8 billion in new capital – creating new value for the companies, their employees and their investors.

• The $8.5 trillion corporate bond market is the largest in the world: almost 1,400 companies issued $1.5 trillion in corporate bonds to fund their operations and growth in 2016.

• U.S. municipal issuers raised $445.8 billion in 2016 to finance important community infrastructure projects including schools, airports, roads and bridges.

U.S. Economy – GDP

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• U.S. gross domestic production was $18.6 trillion in 2016, up 28.3% from $14.9 trillion in 2007.

2007 20160

2

4

6

8

10

12

14

16

18

20

Source: Bureau of Economic Analysis

GDP (Real)2007 and 2016

$ Trillions

19.3% 16.5%

67% 68%

-5.6% -3.1%

19.1% 18.2%

2007 2016-20%

0%

20%

40%

60%

80%

100%


GDP By Category (Real)2007 and 2016

GovernmentConsumption &Investment

Net Exports ofGoods andServices (Exports- Imports)

PersonalConsumptionExpenditures

Gross PrivateDomesticInvestment(Corporate)

U.S. Economy – GDP Detail

4

2007 20160

2

4

6

8

10

12

14


GDP By Category - Personal Consumption2007 and 2016

Durable Goods

NondurableGoods

Services

$ Trillions

2007 20160

0.5

1

1.5

2

2.5

3

3.5


GDP By Category - Private Domestic Investment (Corporate)

Change in PrivateInventories

Residential FixedInvestment

Nonresidential FixedInvestment

$ Trillions

U.S. Economy – GDP in Perspective

5

• In 2007, U.S. GDP was more than three times as large as Japan’s GDP, more than four times as large as China’s GDP, and 19.1% smaller than the EU28 GDP.

• In 2016, U.S. GDP was more than four times that of Japan, 1.5 times large as China’s GDP and 13.2% greater than EU28 GDP.

Note: European Union includes the 28 EU-member states; China excludes Hong Kong

0

2

4

6

8

10

12

14

16

18

20

2007 2016Sources: World Bank

Gross Domestic Product of Selected Regions2007 - 2016

Japan

US

European Union

China

$ Trillions

0

10

20

30

40

50

60

70

2007 2016Sources: World Bank

Gross Domestic Product Per Capita of Selected Regions

2007 - 2016

Japan

US

European Union

China

$ Thousands

U.S. Economy - Employment

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• U.S. employment stood at 149 million as of end-2016, up 4.0% from 143 million in 2007.

Transportation and

warehousing3%

Finance and insurance

4%

Administrative and waste

management services

6%

Agriculture, Mining, Utilities,

Construction6%

Manufacturing8%

Health care and social assistance

13%

Trade15%

Government17%

Other28%

U.S. Employment, 2016Total: 148.7 million


0

20

40

60

80

100

120

140

160

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Source: Bureau of Economic Analysis

U.S. Employment2007 - 2016

Government PrivateMillions

U.S. Corporate Financing in Perspective

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Note: Euro Area includes the 19 EU-member states that have adopted the Euro currency

• U.S. companies rely on the capital markets for a greater portion of total funding than do companies

in the Euro Area, Japan or China, which rely more on bank funding.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

U.S. Euro Area Japan China (2014)Sources: Organizsation for Economic Co-operation and Development (OECD), European Central Bank (ECB),

Bank of Japan, National Bureau of Statistics of China

Financing of non-financial corporations2016

Bonds

Equity

Other Financing

Loans

U.S. Corporate Debt Financing in Perspective

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Note: EU includes the 28 EU-member states

• U.S. companies rely more on the debt capital markets for credit financing than do those in the

European Union or Japan, which rely more on bank loans for funding.

20%

75% 80%

80%

25% 20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

US EU JapanSources: Bank of Japan, European Central Bank, Federal Reserve

Debt financing of Non-Financial Corporations2016

Debt Securities Outstanding

Stock of Bank Lending

Equity Markets as % of GDP

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Note: Includes only non-financial corporate equities; EU includes the 28 EU-member states; China excludes Hong Kong

• The U.S. has a larger equity market relative to the size of GDP (147%), followed by Japan (102%),

China (65%) and the European Union (55%).

0%

20%

40%

60%

80%

100%

120%

140%

160%

U.S. EU Japan ChinaSources: OECD, Bank of Japan, ECB, World Bank, World Federation of Exchanges

Size of Listed Equity Market as % of GDP2016

Bond & Equity Markets as % of GDP

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Note: Includes only non-financial corporate equities; EU includes the 28 EU-member states that have adopted the Euro currency; China excludes Hong Kong

• The U.S. has the largest bond and equity market relative to the size of GDP (353%), followed by

Japan (345%), the European Union (205%) and China (149%).

0%

50%

100%

150%

200%

250%

300%

350%

400%

U.S. EU Japan ChinaSources: BIS, World Bank, World Federation of Exchanges

Size of Listed Bond & Equity Market as % of GDP2016

U.S. Capital Markets

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Note: Issuance includes long-term corporate, agency and non-agency MBS and CMOs, agency debentures, Treasury, and municipal securities, and primary and secondary equity issuance. Outstanding includes both short- and long-term debt securities and equity market capitalization.

Bond Market58%

Equity Market42%

U.S. Capital Markets Outstanding - Equity vs Bonds, 2016

Total: $68.3 trillion

Source: NYSE, NASDAQ, Federal Reserve, Bloomberg, U.S. Agencies, U.S. Treasury, SIFMA

Bond Market97%

Equity Market3%

U.S. Capital Markets Issuance - Equity vs Bonds, 2007

Total: $7.5 trillion

Source: Bloomberg, Dealogic, Thomson Reuters, US Agencies, US Treasury, SIFMA

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U.S. Bond Markets: IssuanceBetween 2007 and 2016:

• Treasury issuance increased to represent from 12.7% to 29.9% of total U.S. bond issuance

• Corporate issuance increased from 19.1% to 21.0%

• Mortgage-related issuance decreased from 42.0% to 26.4%

0

1

2

3

4

5

6

7

8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Source: Thomson Reuters, Bloomberg, Dealogic, US Treasury, US Agencies, SIFMA

U.S Long-Term Bond Issuance2007 - 2016

Corporate Asset-Backed Mortgage-related Federal Agency Muni/State Treasury$ Trillions

U.S. Bond Markets: Outstanding

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• The total value of outstanding bonds in the U.S. was $39.4 trillion at the end of 2016, 52.6% larger

than at end-2007.

• Municipals, corporates and Treasuries increased in dollar volume outstanding between 2007 and

2016, with Treasuries doubling, corporates growing 61.9% and municipals growing by 12.0%

between 2007 and 2016.

0

5

10

15

20

25

30

35

40

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Source: Bloomberg, Thomson Reuters, US Treasury, US Agencies, Federal Reserve, SIFMA

U.S. Bond Market: Outstanding2007 - 2016

Treasury Municipal Federal Agency Mortgage-related Asset-Backed Corporate

$ Trillions

Treasury Bond Markets: A Closer Look

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• The U.S. Treasury issues different maturities of debt: • Short Term or Bills (up to one year) and • Long-Term or Notes (one year to 10 years) and Bonds (over 10 years).

• In 2016, the U.S. Treasury issued $2.2 trillion in new long-term marketable securities, almost three times the $752.2 billion issued in 2007.

• The U.S. Treasury marketable bond market outstanding was $13.9 trillion as of end-2016, up over three-fold from $4.5 trillion at end-2007.

0

500

1,000

1,500

2,000

2,500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Source: U.S. Treasury

U.S. Long-Term Treasury Bond Issuance2007 - 2016

$ Billions

Bills74%

Notes24%

Bonds2%

U.S. Treasury Bond Issuance By Tenor, 2016Total: $8.3 trillion

Source: U.S. Treasury

Municipal Bond Markets: A Closer Look

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• Municipal bonds are issued by state and local governments, agencies and authorities. There are over 31,000 different municipal bond issuers with bonds outstanding.

• In 2016, $445.8 billion in long-term municipal securities were issued, 3.9% above the $429.2 billion in 2007.

• The municipal bond market outstanding was $3.8 trillion as of end-2016, up 12.0% from end-2007.

0

50

100

150

200

250

300

350

400

450

500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Source: Thomson Reuters

Municipal Issuance2007 - 2016

GeneralObligationRevenue

$ Billions

Education28%

General Purpose

23%Transportation

11%

Utilities11%

Healthcare10%

Housing4%

Electric Power3%

Other10%

Municipal Issuance By Type, 2016Total: $403.1 billion

Source: Thomson Reuters

Corporate Bond Markets: A Closer Look

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• Corporate bonds can be divided into investment grade (IG) and high yield (HY) based on their credit rating. IG bonds have ratings of BBB to AAA, while HY bonds have credit rating below BB. Bonds that have not been rated are also counted as HY.

• In 2016 $1.5 trillion of corporate bonds were issued, up 34.1% from $1.1 trillion in 2007.

• The size of the corporate bond market was $8.5 trillion in 2016, up 61.9% from $5.3 trillion in 2007.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800


Corporate Bonds Issuance2007 - 2016

High Yield

Investment Grade

$ Billions

Financials45%

Energy and Power13%

High Technology

7%

Healthcare8%

Industrials6%

Media and Entertainment

4%

Telecom3% Other

14%

Corporate Bond Market Issuance, 2016Total: $1.5 trillion


Mortgage-Related Markets: A Closer Look

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• The mortgage-related securities market is comprised of: • Agency mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs)• Non-agency commercial residential mortgage-backed securities (CMBS) and residential

mortgage-backed securities (RMBS).

• In 2016, mortgage-related securities issuance totaled $1.9 trillion, 23.1% below the $2.5 trillion in 2007.

• The mortgage-related market had $8.9 trillion outstanding at end-2016, down 4.8% from $9.4 trillion in 2007.

0

500

1,000

1,500

2,000

2,500

3,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Bloomberg, Thomson Reuters, Dealogic, Fannie Mae, Freddie Mac, Ginnie Mae, SIFMA

Mortgage-Related Issuance2007 - 2016

Non-AgencyAgency

$ Billions

Agency MBS84%

Agency CMO8%

Non-Agency CMBS

4%

Non-Agency RMBS

4%

Mortgage-Related Issuance By Type, 2016Total: $1.9 trillion

Sources: Bloomberg, Dealogic, Thomson Reuters, US Agencies, SIFMA

Asset-Backed Markets: A Closer Look

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• Asset-backed securities are backed by cash flows of non-mortgage collateral such as auto loans, credit card balances or student loans.

• In 2016, $283.9 billion of asset-backed securities were issued in 2016, down 2.1% from 2007.

• The asset-backed market had $1.3 trillion outstanding as of the end-2016, down 31.7% from 2007.

Auto33%

CDO27%

Credit Cards10%

Equipment5%

Other19%

Student Loans6%

Asset-Backed Issuance By Type, 2016Total: $283.9 billion


0

50

100

150

200

250

300

350


Asset-Backed Issuance2007 - 2016

$ Billions

Agency Bond Markets: A Closer Look

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• Agency bonds are debt securities issued by U.S. federal agencies or government-sponsored enterprises (GSEs). The largest three agency issuers are Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Banks (FHLBs).

• In 2016, $915.5 billion in agency securities were issued, up 10.1% from the $831.2 billion in 2007.

• The agency bond market had $2.0 trillion outstanding at end-2016, down 32.2% from $2.9 trillion in 2007.

Fannie Mae22%

Federal Farm Credit18%Federal Home

Loan Banks34%

Freddie Mac26%

Long-Term Agency Bond Issuance by Agency, 2016Total: $915.5 billion

Source: Thomson Reuters0

200

400

600

800

1,000

1,200

1,400


Long-Term Agency Bond Issuance2007 - 2016

$ Billions

Equity Markets: A Closer Look

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• Most of the equity issued in the U.S. is in the form of common stock, which represents ownership in a corporation, with the balance issued in preferred stock, which combines features of debt and equity. Common shares can be divided further into Initial Public Offerings (IPOs) - the first sale of stock to the public and secondary offerings – every subsequent stock issuance.

• In 2016, stock offerings raised $197.6 billion, down 19.1% from $244.3 billion in 2007.

• As of end-2016, U.S. equity market capitalization stood at $27.4 trillion, 37.3% higher than in 2007.

Preferred Stock12%

Initial Public Offerings

10%

Secondary Offerings

78%

U.S. Equity Market Issuance, 2016Total: $197.6 billion


0

50

100

150

200

250

300

350


U.S. Equity Market Issuance2007 - 2016

Preferred StockInitial Public OfferingsSecondary Offerings

$ Billions

Equity Markets: A Closer Look at IPOs

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• IPOs can be divided into “true” IPOs which are offered by companies going public and IPOs offered by closed-end mutual funds.

• In 2016, $17.8 billion was raised in “true” IPOs, down 67.0% from $53.9 billion in 2007 and $3.0 billion in closed-end IPOs, 92.5% down from $39.8 billion in 2007.

Healthcare17%

Energy and Power16%

High Technology

16%Financials14%

Retail10%

Real Estate8%

Consumer Products and

Services7%

Other12%

"True" IPO Issuance, 2016Total: $17.8 billion

Source: Thomson Reuters 0

10

20

30

40

50

60

70

80

90

100

110


IPO Issuance2007 - 2016

Closed-end funds IPOs

"True" IPOs

$ Billions

capital markets deck 2017 - sifma · • long-term or notes (one year to 10 years) and bonds (over...

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