BOCA RATON, FLA. - Issuance out of single-seller ABCP conduits is expected to continue to rise this year, in large part due to the increase in extendible note issuance out of single-seller conduits. There was $15.9 billion in U.S. ABCP outstanding in single-seller programs as of the first quarter, and $17.6 billion as of last year.
Extendible notes give an issuer the ability to suspend payments to investors under certain circumstances - good for issuers in the face of a market downturn, but perhaps not so good for investors, who have previously expressed concern of one extension leading to a ripple of others. The total number of extendible notes outstanding rose above $100 billion in March from some $60 billion in the same month last year, according to Lehman Brothers. And as of June, the notes currently constitute 12.5% of total U.S. ABCP outstandings. The notes made up 10% of the market last year.