Capital markets are hotter than ever.
Decades before companies around the world provided investors with trillions of dollars in debt and stocks this year and used the stock market rally to start pulling back support from the Federal Reserve and other big guys central banks. I can’t wait to take advantage of the easiest loan terms.
The binge eating, which includes the sale of more than $ 1,000 billion in stocks and the issuance of nearly $ 4 trillion in bonds, involves some of the best-known companies in the business world, such as Apple, Walmart, Baidu and Volkswagen. And even as bankers sign their loans and compete to close their initial public offering, the backlog of unfinished transactions remains daunting.
Duncan Smith, head of European equities and capital markets at RBC, said: Smith compared the intensity of his work on initial public offerings and secondary equity sales versus a few years before the dot-boom boom. com and the financial crisis.
According to data provider Refinitiv, about $ 8.7 trillion in sales of stocks, bond issuances and loan transactions (including bank syndicated loans) have been raised at an all-time high. The managers, who must decide to invest at a breakneck pace, are exhausted, but have not yet met demand despite the turmoil in the markets at the end of September.
In the United States, the volume of traditional IPOs first surpassed the peak reached in 1999 before Dotcom went bankrupt as a company like a brokerage firm. Robin Hood is on the market. Banks poised to collect record investment banking fees this year, such as Citibank, Bank of America and Goldman Sachs, have added staff to their underwriting and syndication teams to ensure they don’t lose their jobs to their rivals. I am moving.
Global equity issuance is near last year’s record, boosted by the following secondary equity sales of $ 504 billion by listed groups: China Telecom and UK insurance company Prudential. By Hong Kong billionaire Richard Li and electric car maker Rivian are listed by the end of the year, negotiators may soon surpass that record. It indicates that there is.
Even excluding the flood of shell companies, the numbers are impressive. Known as Spacs, it was listed earlier in the year – a trend that captivated Wall Street as hundreds of organizations with no real business were exposed to buying other businesses and going public. .
Nearly 500 ad hoc acquisition companies raised $ 128 billion this year. This includes $ 15.7 billion in the third quarter. The number of published Spacs It has dropped considerably Since early 2021, it has stabilized in recent months, especially since we have found a private company to merge with a previously listed shell company.
âIn the first quarter he occupied a huge chunk of the IPO market, but it didn’t last longâ¦ But I have a much higher level of future sustainability than it was. I think [before 2020]Jeff Banzel, Global Co-Head of Equity Capital Markets at Deutsche Bank, said.
Space is not the only alternative that companies have used to publish. Direct registrations have moved away from the surrounding area, as well as from well-known companies like the eyewear manufacturers. Warby Parker And the Coinbase cryptocurrency exchange operators I used it as a way to access the market. This option is primarily intended for companies that do not need to raise new capital and that allow existing investors to sell their shares. So far this year, six lists have been completed in the United States.
Investors fear slowing economic growth, monetary tightening, potential debt shocks in China and the debt ceiling dispute in the United States, but the capital market boom has yet to be shaken by increasing volatility. ..
September, S & P500 First monthly loss Since January, the FTSE All World Index has posted the largest monthly decline since the bottom of the crisis last March, as investors were surprised by the prospect of rising interest rates.
Nonetheless, during the last weeks of September, the banks pretty much followed the path of the market. $ 15 billion in bonds and loans Raise the largest leveraged buyout funding since the financial crisis. Despite a few days of spikes in stock and bond market volatility, there was a flood of trading orders, according to those who explained the problem.
By the time the package was finalized to finance the Private Equity Consortium’s acquisition of medical device maker Medline this week, banks were in so much demand that a group of buyers would ultimately have to pay. Secure liquidity that has reduced interest costs.
Vivek Bantwar, global head of finance at Goldman Sachs, said new trades were surprisingly resilient despite volatile stock markets. He said last week that 38 junk bond and loan transactions have been completed in the United States, all but one with higher returns than expected by the underwriters.
“We are in an environment where GDP is increasing, companies are doing well and the cushion they have in terms of interest coverage and debt statistics is strengthening,” he said.
Recent volatility may prompt some issuers to trade, as they raise a âquestion mark for future liquidityâ. .. .. Therefore, this gives companies a push to act now, âsaid Jeff Tanenbaum, who manages capital markets in Europe, the Middle East and Africa for Bank of America.
As a result, many bankers look at the index of financial condition. Barometers often measure changes in credit conditions, stock markets, and currencies to gauge how easy it is for businesses and governments to raise their own money. In early September, the highly-followed US action created by Goldman Sachs hit an all-time high, demonstrating that it has never been easier. But in the meantime, he started to show signs of weakness.
DoubleLine Capital’s portfolio manager, Monica Erickson, is one of several portfolio managers in the United States, scrutinizing the sale of new debt and deciding where to invest on behalf of the firm’s clients. She said some debt deals had been oversubscribed by ten, a sign of strong demand, even though post-trade transactions were outpacing her office.
“I know how new you are [bond offerings] It shows how much is being traded and absorbed by the market, and that there is a huge demand for assets, âshe said. âThe flow of funds has been very important this year. “
Selling high quality bonds (the safer end of a company’s debt spectrum) is one of the few areas of the market that will never feel late, but it will subside in the market.
Borrowing in the bond market has increased over the past year as companies issue debt and store cash to survive the pandemic. This year, the amount of investment grade bonds fell 15% to $ 3.4 trillion, but the number of companies borrowing through the bond market is increasing.
This decline is due to the boom in transactions of private equity groups and many of these buyout stores. Pay the dividends yourself Funded by new bonds and new loans.
In September, a particular transaction caught the attention of the market. It was a triple C loan from software company BMC, priced at just 6.3%. This showed the minimum cost of borrowing for a loan deemed high risk by major credit rating agencies since at least 2010, when the S&P Global Market Intelligence Unit LCD began tracking the data.
As private equity firms raise more money than ever before, deals can be sustained, he has stepped on the accelerator in terms of debt and stock issuance. Already this year, more than 800 billion dollars have been mobilized, exceeding for the first time the record before the global financial crisis.
âWe participate in a lot of conversations, go to our clients when there is no opportunity and talk about M&A financing. What if we had to raise $ 10 billion in acquisition financing? ? $ 50 billion in funding? Said John Kiriko, global co-head of banking and capital markets at Citi. âIt is very rare that all financial markets are going all over the place. “
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