Investors anticipate equity issuance revival

Following a chilly 2022, equity capital markets activity is expected to heat up again this year, according to an investor survey from Goldman Sachs Inc.

The firm’s latest annual investor survey, which took place in December, found that opinions are bullish on the year ahead.

It said investors — including hedge funds, mutual funds and pension funds — expect equity market activity to double from last year.

The firm noted that new issuance of investment-grade corporate bonds “is already strong” and that this “usually precedes activity in riskier asset classes.”

“The depth of the investment-grade market is a positive sign for the potential increase in equity capital markets activity,” said Lizzie Reed, global head of the equity capital markets syndicate desk for investment banking, in a research note.

The firm also noted that the new issue market for high-yield debt is “getting more traction.”

In particular, the health-care sector and the tech, media and telecom sector are seen as having the best prospects for a rebound in initial public offering (IPO) activity, Goldman noted.

“The IPO markets are open. The challenge for many companies looking to go public has been finding equilibrium with where buyers want to invest,” said David Ludwig, global head of equity capital markets for investment banking.

Additionally, convertible securities offering activity is expected to ramp up, the note said.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.