Securities issuances are predicted to rebound in 2024 – even while interest rates remain elevated due to the ongoing battle by the US Federal Reserve to crush sticky inflation. This is according to a report from S&P Global Market Intelligence.
The report states that global equity issuance has fallen since the Fed began raising interest rates in the first quarter of 2022. Global equity offerings in the last seven quarters have been below $101 billion – less than half of the $215 billion in equity offerings during each quarter of 2021.
The report adds that there are “signs of life” in the initial public offering (IPO) market even though the IPO market has tanked during the first nine months of the year.
As for bond markets, issuances have “stabilized” in 2023 after they cratered in 2022.
Investment grade offerings declined 1.5% year-over-year to $1 trillion through the first nine months of 2023, compared to the 15% year-over-year drop in 2022.
Regarding high yield, issuance has risen by 45% year over year in 2023 through the end of September, a recovery from an 80% year-over-year drop in 2022.
Nathan Stovall, Director of Financial Institutions Research at S&P Global Market Intelligence, said that equity issuances have been “abysmal” and debt markets have remained “open” as the global economy has struggled.
“There are some signs of life in the U.S. IPO market, and future activity could look even more promising as the Fed nears the end of its rate hike cycle, but investors are not fully waving the green flag yet, with the economic outlook for 2024 remaining patchy for most major economies, including the U.S.”
While S&P is expecting more activity in 2024, the global economy is still hampered not only by inflation/high-interest rates but also by global uncertainty in regard to geopolitical concerns such as the War in Ukraine, saber-rattling by China, and a forthcoming US Presidential election that could be dramatic. One recognized political observer recently said the risk of global conflict is higher than in recent decades.