Saturday, June 3, 2023

less market, more banking

The year 2022 will close at the lowest level of the last decade in the number and volume of IPOs, affecting all geographical markets of the world without exception. The negative development of variable income markets, with consequential generalized penalties in listed companies, and the difficult geopolitical and macroeconomic context, markedly discourage companies from turning to stock markets as a means of financing or as disinvestment. has been a doer. The strategy for former shareholders has also meant the bursting of the SPAC (Special Purpose Acquisition Companies) bubble that had fueled the IPO market in the US in previous years, questioning the valuation of a part of the listed technology sector.

Across Europe, stock exchanges have recorded less than a dozen additions in 2022, in contrast to more than 130 exits in 2021, or even the roughly 40 companies that went public in 2020 despite the pandemic. Even in 2012, at the height of the sovereign debt crisis, such a low number of incorporations was not seen (about 25 exits). The Spanish market has not been an exception, and has only registered one new issue on the perpetual market so far this year.

But the corporate bond market has also registered markedly less activity this year, with issuance volumes around 20% of last year’s, once again a general decline across geographies, but which has particularly Has affected companies with the worst credit profiles (high yield, In the Spanish case, we estimate that companies will raise funds through debt issues in 2022 amounting to approximately 12,600 million euros, a 60% decrease compared to 2021.

In this context, companies have had to resort to higher percentage bank funding to meet their liquidity needs. Even in the US, a clear paradigm of an economy based on capital markets, there has been a strong growth in bank financing, compared to the traditionally more bank-banked Europe. Undoubtedly, the current solvency position of banks, far stronger than in previous crises, has allowed them to play an important role in substituting resources from the capital market. In any case, it is expected that as the economic environment improves, higher levels of activity will return to both the bond and stock markets, which should maintain that desirable mix of bank funding and equity markets capitals. are necessary for

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