Mohammed bin Masoud – Dammam – At least 100 companies worldwide have postponed or withdrawn financing deals worth more than $45 billion since the Russian invasion of Ukraine, including initial public offerings, bonds or loans and acquisitions.
US stock market deals were hardest hit by global volatility in the first quarter, as a handful of companies postponed listings, while Japanese and European bond markets also suffered delays.
Deferral decisions by companies come as the conflict has disrupted financing markets, hurting investor sentiment for risk and increasing uncertainty about growth, raising interest rates and supply chains. The pulled deals mean the fee feast that bankers tested last year may be on the cusp of turning into a famine.
“Volatile markets mean deals are difficult to execute,” said Marco Baldini, head of the EMEA bond syndicate at Barclays Bank. “Sales of high-quality bonds have plummeted with the outbreak of war in Ukraine, but in a promising sign, volumes have risen dramatically as we approach Easter.” .
About 50 companies have halted their initial public offering plans since late February, of which 30 are listed in the United States, including companies such as Bioxytran, Crown Equity Holdings and Sagimet. Biosciences). It is difficult to estimate the total value of the deferred IPOs, as most transaction volumes are not disclosed.
“Several plans for new offerings are likely to be deferred until more quiet returns are achieved,” said Susanna Streeter, chief investment and markets analyst at Hargreaves Lansdown. Timing is everything for the IPO.”
Mergers and acquisitions weren’t doing much better, with about 10 deals valued at more than $5 billion on hold since the war. That sent global mergers and acquisitions down 15% in the first three months of the year to $1.02 trillion, the lowest rate since the third quarter of 2020, according to data compiled by Bloomberg.
Microsoft’s $69 billion acquisition of video game company Activision Blizzard was one of a few mega deals, with companies mostly staying away from big deals.
Europe saw the worst drop, with acquisitions targeting regional companies down 38%. Britain’s Spectris ended negotiations in March to buy Oxford Instruments in a deal valued at around £1.8 billion.
Peel Hunt said delayed deals would reduce revenue for its investment banking unit, while Numis warned of damage.
The impact of the war has been felt in global bond markets, where issuance is down 14% so far this year, according to Bloomberg data.
Eight European issuers, including the Slovak Republic, EnBW Energy Baden-Wuerttemberg, and French financial firm Coface, have suspended more than $5 billion in bonds.
In Japan, seven companies, including Sumitomo Mitsui Construction, Tohoku Electric Power, and Orix Corp., pulled out local bond issues totaling 800 million. about a dollar.
In India, even the state-owned Indian Railway Finance Corp has been unable to avoid delaying its sale.
Other debt markets, including leveraged loans and asset-backed securities, are also struggling.
Callaway Golf marketed the $950 million loan before it was put on hold indefinitely at the beginning of March, citing market conditions.
The German eye care company Veonet Group suspended a €795 million loan in the form of a syndicated loan on the day the war broke out, February 24.
Even electric car giant Tesla was forced to delay the sale of more than $1 billion in asset-backed securities in mid-March, while the likes of Deutsche Bank were forced to suspend mortgage-backed business deals.
“The war in Ukraine is exacerbating existing supply chain constraints and increasing input costs for corporate borrowers, just as central banks are preparing to tighten financial conditions in response to the worst inflation data in decades,” Scope Ratings says in a recent report.
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