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GC Podcast

A golden opportunity for oil and gas as new reality bites capital markets
Last week on the GC Podcast, we questioned whether we had passed the high point of bond market madness — the sorts of new issues that left some market participants wondering why anyone would buy a deal on such parsimonious terms as they watched many more pile in regardless. This week, there was mounting evidence to suggest we had.

Top rated issuers in the SSA and covered bond markets found themselves locked out of longer dated debt — at least at terms they would be happy to pay — as benchmark government bond yields rose further still. Inflation is persistent; even the ECB now thinks so as it revealed in the minutes of December meeting this week. There is no doubt that investors are expecting rates to keep rising and that is driving them into ever more defensive deals at short maturities.

In emerging markets, it is not just the rates picture that is troubling issuers and investors. Russia’s threat to Ukraine and a number of more localised concerns mean that issuers that have mandated banks to bring bonds to market are waiting before doing so. As they watch from the side lines, they will have seen some deals struggle this week while other issuers paid a large premium to issue. Is wating for things to get better a policy that will prove penny wise but pound foolish?

In equity markets, however, there might be a golden chance for capital raising for heavy polluting companies from the oil, gas and mining sectors — and possibly the last one they will ever have. We explain the factors behind that as well as discuss how the IPO market will look for them and everyone else this year.

Finally, and perhaps to redress the ESG balance, we examine a new way to get private capital from the rich world into the developing one in a scheme that may solve one of the biggest riddles in development finance.
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