Firms across the globe are ditching fund-raising deals at a quickening pace, as volatility destabilizes credit markets following Russia’s invasion of Ukraine.
Electric car giant Tesla Inc. is the latest big name firm to scrap financing plans, as it postponed a $1 billion offering of bonds backed by leases on its vehicles last week. Almost 80 companies, nearly half from the U.S., have put at least $25 billion of deals on hold since the start of the war nearly a month ago.
“There has been a severe jolt to investor confidence since the invasion of Ukraine as sanctions have been slapped on Russia and commodity prices roared upwards,” said Susannah Streeter, senior investment and markets analyst with Hargreaves Lansdown Plc.
The caution has reached all corners of the globe. India’s Mumbai International Airport Ltd. recently delayed a dollar bond deal, SS&C Technologies Holdings Inc. halted a $1.7 billion buyout loan on Wednesday and Brazil’s Trocafone SA scrapped an initial public offering.
More than $18 billion of the delayed deals are for debt financing, including bonds, loans and asset-backed securities, while the rest is for for mergers, acquisitions and initial public offerings.
The war has also left dealmakers in Europe unsure about if and when roughly $300 billion of mergers, acquisitions and listings will go ahead.
There’s already been a 74% plunge in global equity listings, and a 28% fall in global corporate bond issuance so far this year, according to data compiled by Bloomberg.
Elsewhere in credit markets:
EMEA
It’s a promising start to the week for Europe’s primary bond market with the sudden re-emergence of corporate issuers including chemicals firm Akzo Nobel NV, beauty products maker L’Oreal SA and packaged food company Nestle SA.
- Akzo Nobel and Nestle are expected to price their bonds on Monday, while L’Oreal started investor calls for its planned issue
- Volkswagen AG, Skandinaviska Enskilda Banken AB and Vonovia SE are also among Monday’s six issuers so far, with daily volume set to reach at least 6 billion euros
- 60% of respondents to a weekly Bloomberg News survey expect marketwide sales for the week to top EU25b
- Four additional new mandates have also been added to pipeline so far this morning
Asia
Asian issuers are returning to the dollar bond market after the Federal Reserve’s interest rate hike last week removed uncertainties, with the Philippines and South Korea’s Hyundai Heavy Industries Co. Ltd. seeking sustainable debt.
- KEB Hana Bank is also planning a dollar-denominated sustainability bond with investor calls commencing Monday
- Asia sustainable bond sales, including sustainability-linked debt and those with proceeds earmarked for green and social purposes, reached $14 billion year-to-date
- The quarter’s issuance is only about $3 billion short of same three-month period in 2021
Americas
Bonds syndicate desks’ estimates for this week center around $30 billion of supply following almost $29 billion of sales last week.
- March volume currently stands at $158.1 billion, already exceeding consensus forecast for about $135 billion
- Banks have wrapped up a struggling leveraged loan and bond sale for SPX Flow Inc. after shifting a portion of the debt into the loan and decreasing some of the discount on the bond
- The junk-bond portion priced Friday afternoon at a size of $500 million, down from $570 million originally
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