Today is Tuesday, August 09, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition, we put the spotlight on global private equity activity. Unfavorable market conditions are forcing private equity and venture capital firms to hold onto portfolio companies for longer. The number of portfolio exits fell to 722 in the second quarter of 2022 from 1,018 deals in the same period in 2021, according to S&P Global Market Intelligence data. Falling company valuations could revive deal activity in the consumer sector after a first-half slowdown.
Citigroup, Goldman Sachs and Bank of America, three of the top special purpose acquisition company underwriters over the last year, have paused activities in the SPAC market. The pullback coincided with new rules proposed by the U.S. Securities and Exchange Commission requiring additional disclosures about SPAC sponsors, conflicts of interest and acquisitions between SPACs and private operating companies. Market participants have said SPAC offerings are likely to cool, partly due to the SEC clampdown.
The U.S. Inflation Reduction Act, if passed, is poised to become a boon for carbon capture technology. The legislation seeks to increase subsidies by up to 70% for facilities that capture emissions. The expanded incentives, coupled with bipartisan infrastructure law spending, could spur a 13-fold increase in the deployment of carbon capture tools by 2035, according to the Carbon Capture Coalition.
- In Focus: Private Equity
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Market conditions slow private equity exit activity in Q2
The aggregate transaction value of private equity and venture capital-backed exits in the second quarter slipped 14.6% year over year, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
Consumer sector valuation plunge presents discounted targets for private equity
Dealmaking activity may be poised for a rebound in the second half of the year.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Top SPAC underwriters step back from cooling market
Citi, Goldman Sachs and Bank of America, three of the top special purpose acquisition company underwriters over the last year, have all reportedly paused SPAC work following the release of new SEC rules.
—Read the full article from S&P Global Market Intelligence
US bank bond portfolios take another hit, but pressure eases
The interest rate shock has eased since the first quarter, and the deterioration in big bank tangible book value has slowed.
—Read the full article from S&P Global Market Intelligence
Asian banks to remain cautious about issuing bonds as conditions tighten
Banks in the region raised $3.49 billion in debt in June, down from $6.06 billion in the previous month and $19.79 billion in June 2021, S&P Global Market Intelligence data shows.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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Lower-rated U.S. companies bear the brunt of rising costs
Operating expenses increased in the first quarter of 2022 for companies rated non-investment-grade, eating into margins as the costs of wages, energy and inputs rose. Yet the expenses-to-revenue ratio has risen little during the pandemic.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Real Estate
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US housing market: House price slowdown persists in May
The 20-City Composite Index posted 20.5% year-over-year growth in May, while the 10-City Composite Index increased 19.0% during the same period.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Insurance
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India's LIC leads global insurance sector's IPO activity in H1
Of the $2.86 billion raised from IPOs of global insurance and insurtech companies in the first six months of 2022, $2.66 billion came from Life Insurance Corp. of India's listing.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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Hong Kong TMT IPO proceeds plunge amid falling listings, regulatory woes
Hong Kong's technology, media and telecom initial public offerings fell in volume as well as proceeds in the first half of 2022, as the city's overall listings also took a hit.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Supply Chain
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US container imports on the rise in 2022
Inflation, fuel costs and consumer spending levels will determine whether import volumes will continue to rise in the second half of 2022.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Uranium industry set for record year of term contracting amid supply deficit
Term contracting is making a big comeback in the nuclear feedstock market and will hit a record level in 2022, said Ian Purdy, CEO of Paladin Energy. The company will restart its Langer Heinrich mine in Namibia by early 2024.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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US climate deal heralded by carbon capture fans as steroid shot to industry
The Inflation Reduction Act would increase the tax credit for every tonne of CO2 stored by up to 70% for industrial emitters, making it "the most transformative and far-reaching policy support in the world," the Carbon Capture Coalition said.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: ESG
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Supply chains are European telcos' biggest climate headache
Europe's telecom sector is a leader on climate action, reducing most of its direct carbon emissions. Cleaning up indirect emissions from suppliers and customers, however, remains a challenge.
—Read the full article from S&P Global Market Intelligence
Investor scrutiny intensifies as more banks link executive pay to climate goals
Environmental, social and governance targets are making their way into bank pay policies, and the trend is likely to gain momentum in the wake of new regulatory guidance. Investors, meanwhile, are raising their expectations.
—Read the full article from S&P Global Market Intelligence
Large US banks assure Texas, West Virginia they are not abandoning fossil fuels
Banks are trying to balance new state mandates banning corporate social and environmental policies with pressures from shareholders who want them to stick to their climate pledges.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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Tech M&A so far holding up as equity markets break down
Australia, Southeast Asia lead in regional M&A deal volume
Chalco's $987M aluminum deal tops metals, mining M&A for week ended July 29
Asia-Pacific financial institutions M&A interest tracker
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Written and compiled by Louis Bacani