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Golden issuance window could be a phoney war

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By Sam Kerr
03 Sep 2020

September began with a bang for equity issuance, capped off on Wednesday by a mammoth €2.7bn share sale from Siemens Healthineers. However, the rush of deals is not just being driven by optimism. Bankers fear darker days returning.

One banker speaking to GlobalCapital suggested that the end of October will be an inflection point for the market after an extremely hectic issuance period.

The end of October is also dangerously close to a US election, which may prove to be one of the most disruptive in recent times. Third quarter corporate results will also be revealed and cases of Covid-19 could rise as winter approaches, according to the predictions of scientists.

When bankers say, as one did this week, that issuance conditions are “as good as it gets”, it is clear they think things will get worse.

Eighty-one years ago, September marked the start of what became known as the 'Phoney War'. The UK and France had declared war on Germany but there was little sign of it in the West until the German attack on the latter in May 1940. After that all hell broke loose.

Some believe that Western financial markets are at a similar point, trading far too rich considering the perils of the coronavirus pandemic and the wave of possible bad news on the horizon.

Issuers that they persuade to bring deals now rather than wait will have made the right choice. It is understood that quite a pipeline is building. 

That may result in congested markets, but dealing with rival offerings and paying up slightly to outshine them is a better position to be in than being unable to raise capital at all in a market crash, or global recession.


By Sam Kerr
03 Sep 2020