Capital markets are hotter than ever.
Decades before companies around the world provided investors with trillions of dollars in debt and equities this year and took advantage of the stock market recovery to begin withdrawing support from the Federal Reserve and other major central banks. I’m in a hurry to take advantage of the simplest borrowing terms in.
The feeding frenzy, which includes the sale of over $ 1 trillion in shares and the issuance of nearly $ 4 trillion in bonds, involves some of the most well-known companies in the business world, such as Apple, Walmart, Baidu and Volkswagen. And even as bankers ink their loans and compete to complete their initial public offering, the backlog of unfinished transactions remains daunting.
Duncan Smith, Head of European Equity and Capital Markets at RBC, said: Smith compared the intensity of his work on initial public offerings and secondary stock sales compared to a few years before the dot-com boom and the financial crisis.
Approximately $ 8.7 trillion in stock sales, bond issuance and loan transactions (including bank-syndicated loans) have been raised at record pace, according to data provider Refinitiv. Fund managers, who have to decide whether to invest at a blazing pace, are exhausted, but have not yet met demand despite market turmoil at the end of September.
In the United States, the volume of traditional IPOs first exceeded the peak set in 1999 before Dotcom went bankrupt as a company like a brokerage firm. Robin Hood is on the market.. Banks ready 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’m moving.
Global equity issuance is close to last year’s full-year record, boosted by the following $ 504 billion secondary equity sales by listed groups: China Telecom And the UK Insurance company Prudential.. Also, if companies such as FWD Group, an insurance company owned by Hong Kong’s Billionaire Richard Li, and electric car maker Rivian are listed by the end of the year, deal makers could soon exceed that record. It states that there is.
Even excluding the shell company flood, the numbers are impressive Known as Spacs It was listed earlier in the year — a trend that captivated Wall Street as hundreds of organizations without a real business were exposed to buy other businesses and launch them on the stock market.
Nearly 500 special purpose acquisition companies have raised $ 128 billion this year. This includes $ 15.7 billion in the third quarter.Number of Spacs published It fell considerably Since the beginning of 2021, it has stabilized in recent months, especially as we have found a private company to merge with a previously listed shell company.
“In the first quarter, it occupied a very large part of the IPO market, but it didn’t last long … 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 isn’t the only alternative option that companies have used to publish.Direct listings have moved further from the surrounding area, as well as well-known companies like eyeglass makers. Warby Parker And cryptocurrency exchange operators Coinbase I used it as a way to get to the market. This option is primarily for companies that do not need to raise new capital and instead allow existing investors to sell their shares. So far this year, six lists have been completed in the United States.
Investors are wary of slowing economic growth, monetary tightening, potential debt shocks in China, and the dispute over debt caps in the U.S., but the capital market boom has yet to be shaken by rising volatility. ..
September, S & P500 First monthly loss Since January, the FTSE All World Index has recorded the largest monthly decline since the bottom of the crisis last March, as investors were surprised by the outlook for rising interest rates.
Nonetheless, in the last few weeks of September, banks roughly followed the path to market. $ 15 Billion Bond and Loan Package Raise the largest leveraged buyout funding since the financial crisis. Despite a few days of volatility spikes in the stock and bond markets, there was a flood of trading orders, according to those who explained the issue.
By the time the package was completed to fund the acquisition of medical equipment maker Medline by the Private Equity Consortium this week, banks were in so much demand that a group of buyers would have to pay in the end. Secure cash that was able to reduce interest costs.
Vivek Bantwar, Global Head of Financing at Goldman Sachs, said new deals were surprisingly resilient despite stock market volatility. He said last week that 38 junk bond and loan transactions were completed in the United States, with all but one of them priced at higher yields than the underwriters expected.
“We are in an environment where GDP is growing, companies are doing well, and the cushion they have in terms of interest coverage and leverage statistics is getting stronger,” he said.
Recent volatility may encourage some issuers to proceed with transactions, given that they raise a “question mark for future liquidity.” .. .. Therefore, it provides the impetus for companies to act now, “said Jeff Tanenbaum, who operates capital markets in Europe, the Middle East and Africa for Bank of America.
As a result, so many bankers are looking at the financial position index. Barometers often measure changes in credit status, stock markets, and currencies to measure how easy it is for businesses and governments to raise their own money. At the beginning of September, the closely-tracked US action created by Goldman Sachs hit a record low, demonstrating that it has never been easier. But in the meantime, it began to show signs of weakness.
DoubleLine Capital’s portfolio manager, Monica Erickson, is one of many portfolio managers in the United States, scrutinizing the sale of new debt and deciding where to invest on behalf of the company’s clients. She said some debt offerings were oversubscribed tenfold, as a sign of strong demand, even if post-transaction transactions went beyond her desk.
“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, “she said. “The flow of funds was very strong this year.”
The sale of investment grade bonds—the safest end of a company’s debt spectrum—is one of the few areas in the market that will never feel late, but it will cool down in the market.
Borrowing through the bond market surged last year as companies issued debt and stockpiled cash to survive the pandemic. This year, the amount of investment grade bonds fell by 15% to $ 3.4 trillion, but the number of companies borrowing through the bond market is increasing.
This decline is due to the surge in transactions by private equity groups and many of those buyout shops. Pay dividends yourself Funded by new bonds and loans.
In September, a particular transaction caught the attention of the market. It was a triple C-rated loan from software company BMC, priced at just 6.3%. This showed the minimum borrowing cost of a loan that was judged to be high risk by major credit rating agencies since at least 2010, when the S & P Global Market Intelligence Unit LCD began tracking data.
As private equity companies raise more money than ever before Transactions can be maintained He set foot on the accelerator in terms of debt and stock issuance. Already this year, more than $ 800 billion has been leveraged out, surpassing the pre-global financial crisis record for the first time.
“We participate in many conversations, go to our clients in the absence of opportunity and talk about financing M & A. What if we need to raise $ 10 billion in acquisition funding? ? $ 50 Billion Financing? ”said John Kiriko, Global Co-Head of Banking and Capital Markets in Citi. “It is very rare for all financial markets to work in every way.”
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