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Businesses are putting fundraising efforts on the back burner and focusing more on economic growth, according to a RBC survey on corporate debt issuance.

Just 38% of corporate respondents expect to raise fresh capital in the next two years, despite an expected gradual return to M&A activity, private equity deals, project finance activity and initial public offerings.

Private equity (37%) and syndicated loans (35%) are expected to be among the most popular choices for raising capital, followed by investment-grade debt (25%), secondary equity offering (14%), securitization (14%) and IPOs (11%). Smaller corporations – those with annual revenues between US$75 million and US$250 million– are most likely to raise “significant” amounts of capital (20% vs. 8% for larger firms).

Economic uncertainty in key markets is seen as the greatest risk to fundraising activity (39%), followed by political uncertainty (13%), currency volatility (12%), difficulty in obtaining financing (12%) and risk of default by key customers (11%). Only five percent of corporations see new regulatory challenges as a risk to their funding plan. Caution over fundraising plans has led many to increase their cash reserves, which may be used to fund transaction volumes or simply return money to shareholders.

Respondents see M&A activity as the area where an increase in transaction volumes is most likely (49%), compared to 12 months ago, followed by an increase in IPOs (31%). Financial institutions are more optimistic than non-financial corporations about transaction volumes in their country over the coming year.

Nearly two-thirds of executives say that there will be a “greater” or “much greater” focus on business in overseas emerging markets, compared to domestic markets and overseas developed markets.

“As economic growth in the major economies resumes, we expect a more positive environment for deal making and fundraising activities. Corporates and financial institutions entering the market will undoubtedly face greater competition for limited capital. They will increasingly need to market themselves in a way that makes them attractive to bondholders and shareholders alike, while at the same time competing for capital with sovereigns which may offer wider spreads. In this environment, the ability of corporates to part-fund their own transactions through cash reserves will be extremely attractive to banks, who are increasingly looking to reduce their exposure to risk,” said Doug Guzman, head of Global Investment Banking, RBC Capital Markets.

The survey sample consisted of 440 senior financial and non-financial executives and it was conducted by the Economist Intelligence Unit and commissioned by RBC Capital Markets, the corporate and investment banking arm of Royal Bank of Canada.

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Citi appoints country officer

John Hastings, a 25 year veteran with Citi, has been appointed their country officer and chairman, CEO of Citibank Canada.

As country officer, Hastings will be the central representative in Canada and responsible for ensuring strong, effective relationships between the company and its stakeholders. As chairman and CEO, he will oversee the governance and continued growth of the company.

“This new role provides a tremendous opportunity, particularly as it comes at such a pivotal moment in Citi’s evolution in Canada,” Hastings said. “With significant investments being made in our global banking, global transaction services and Citi Private Bank businesses, I look forward to solidifying Citi’s reputation as Canada’s most global bank.”

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Disnat praised for customer satisfaction

Disnat, the online brokerage division of Desjardins Securities, seems to be doing everything right according to their clients.

For the second year in a row, investors have given it top ranking among Canadian discount brokers for customer satisfaction, according to a J.D. Power and Associates study.

The major factors considered in the study were interaction, account information-statements, trading charges and fees, account offerings, information resources and problem resolution.

“The results of this study bear testimony to the excellent service Disnat provides its investors,” said Yves Néron, senior vice-president and head of private client services at Desjardins Securities. “This recognition motivates us to continue surpassing ourselves a bit more every day.”

(07/06/10)