Credit Market Turbulence Expected to Reduce Issuance in 2008 to
$3.4 Trillion From Elevated 2007 Level; Performance Forecast to
Improve in Second Half

Total 2008 long-term issuance for the covered sectors is expected to be $3.40 trillion, lower than the $4.01 trillion issued in 2007.

Long-term municipal issuance in 2008 will be $405 billion, down 4.7 percent from 2007 issuance volume of $425 billion.

Corporate high-yield bond issuance will be $115 billion in 2008, 15.4 percent less than the $136 billion issued in 2007, and 2008 investment-grade issuance is projected to be $850 billion, 14.7 percent less than $996
billion in 2007.

Commercial paper outstanding will be $1.76 trillion at the end of 2008, compared to $1.86 trillion on November 30, 2007 and $1.79 trillion in January 2007.

Asset-backed securities (ABS) issuance in 2008 will be $325 billion, down 35.9 percent from the $507 billion issued in 2007. Credit card ABS is expected to supplant home equity ABS as the largest issuing sector.

Mortgage-related issuance will be $1.70 trillion in 2008, down about 12.8 percent from the 2007 issuance volume of $1.95 trillion. Non-agency, or private
label issuance share is expected to decrease by half the 2007 volume to $350 billion while agency issuance (combined MBS and CMO) is expected to increase by
about 8.5 percent to $1.35 trillion. Indicative of tighter underwriting and shifting housing sector metrics, the prime mortgage share of private label underwriting is expected to rise from 27 percent to 52 percent.

The S&P 500 will end the year at 1,600, an increase of 8 percent from December 20, 2007.

About the Report

This report provides information on anticipated issuance volumes and interest rate and credit spread outlooks for 2008 in the municipal, corporate, money market and securitization markets. The forecasts are based on a survey of the Association’s member firms conducted during December 2007. Specialists at member firm in each of the market sectors provided the forecasts, indicating key assumptions behind their projections.

Credits

SIFMA Research

• Senior Managing Director, Head of Research and Public Policy: Michael Decker
• Managing Director: Steven Davidson
• Vice President, Statistics: Charles Bartlett
• Vice President, Industry Research: Marcelo Vieira
• Director, Research: Tiffany Coln
• Director, Research: Bryan Gross