International Capital Markets trends 2018/19

In an article published in October by LexisNexis, our international capital markets team gives an overview of recent trends experienced by companies as they raised capital in cross border securities offerings in the international equity capital markets (ECM) and debt capital markets (DCM).

• Overall, the international capital markets turned in a mixed performance in 2018, making a strong start but finishing with one of the weakest Decembers on record for several capital markets products. Globally according to Dealogic, when compared to 2017, ECM issuance in general was down 17%, investment grade debt issuance was down 7%, and high yield debt issuance was also muted, reflecting various geopolitical concerns contributing to increased volatility. Initial public offerings (IPOs) were relatively a bright spot, up 6% compared to 2017, led by the Hong Kong Stock Exchange which outstripped the strong performance of the New York Stock Exchange by a narrow margin. By contrast, capital raised in IPOs in EMEA (Europe, the Middle East and Africa) was down compared to 2017 (by 9%) with the greatest number of IPOs withdrawn since 2012, reflecting concerns over interest rates, the deadlock over the United Kingdom’s proposed exit from the European Union (Brexit), trade wars, global political uncertainty, and increased volatility. Despite these factors, London remained the most active European exchange for IPOs in 2018.
• Trends discussed include ways deal participants seek to reduce the risk of a deal failing (‘de-risking’) and some significant new considerations in choosing a listing venue as well as disclosure hot buttons such as alternative performance measures and market risks including Brexit, transition away from LIBOR and cybersecurity. Examples of de-risking tools are pre-marketing strategies such as recruiting cornerstone or anchor investors and ever-earlier engagement with investors as well as use of standby underwriting agreements (in an acquisition financing context). The de-risking trend reflects the backdrop of potential market fragility because of the geopolitical uncertainty and is likely to continue.
• The article also looks at notable transactions across the capital markets in Asia (excluding Japan), Europe and the United States and key regulatory trends. Examples of such trends include the impact of implementing significant listing rule changes in Hong Kong and Singapore which successfully enhanced their appeal as listing venues relative to other exchanges by attracting listings of so-called ‘new economy’ and technologically focused companies.

For detail on these trends and much more, click here for the full article.