Today is Tuesday, July 19, 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 M&A activity in U.S. banking. The slowdown in dealmaking during the first half of 2022 is likely to continue for the rest of the year at least due to factors including economic uncertainty and rising interest rates, according to industry experts. In the Carolinas, there is a dearth of potential acquisition targets because of a wave of banking consolidation over the last 12 years. The industry is also seeing extended closing times for large deals amid increased regulatory scrutiny.
Just 5% of the 1,554 non-investment-grade-rated issuers in North America have debt maturing in the second half of 2022. The amount due also stands at a "manageable" $56.1 billion, according to S&P Global Ratings. Low levels of maturing debt mean that companies should be largely protected from the consequences of sharply rising borrowing costs in the near term.
Texas remains a prime destination for cryptocurrency mining companies hungry for electricity. The Lone Star State continues to lure miners with inexpensive power and few regulatory hurdles. Texas has also used incentives such as generous demand response programs for large industrial and commercial customers.
- In Focus: US Bank M&A
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US bank M&A lull likely to continue throughout 2022 as uncertainty lingers
Eighty-two U.S. bank deals were announced in the first six months of 2022, down from 100 in the same period of 2021. Only one deal with a value of more than $1 billion was announced, compared to six in the first half of 2021.
—Read the full article from S&P Global Market Intelligence
Years of bank consolidation create M&A scarcity value in Carolinas
The number of banks in North and South Carolina has more than halved over the past 12 years, helping to drive up valuations for remaining acquisition targets.
—Read the full article from S&P Global Market Intelligence
Extended closing times plague large bank deals
The median time to close bank M&A deals has held steady, but some pending transactions have surpassed the typical timeframe by a considerable margin.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Economic outlook to take priority in Q2'22 earnings reports amid recession fears
U.S. banks may report strong second-quarter earnings, but investor fears mean that outlooks will take precedence.
—Read the full article from S&P Global Market Intelligence
US bank loan growth expected to slow after blistering Q2'22
Banks look set to post the hottest loan growth since the beginning of the pandemic, but a deteriorating economy is likely to hurt momentum.
—Read the full article from S&P Global Market Intelligence
More Asia-Pacific banks to shed insurance units to focus on their core
Lenders around the region have been selling insurance businesses at a faster rate than acquiring them, S&P Global Market Intelligence data shows. In 2021, the region saw ten such transactions, up from seven in the prior year.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Insurance
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Insurers revisit cyber coverage as demand, premiums spike
Axa XL's Rachel Rossini said a rise in ransomware attacks has led to the insurer "re-underwriting our entire book."
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Fintech
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Outliers in chartered fintech banks' profitability metrics show complexity
Fintechs with bank charters demonstrated clearly robust profitability in the first quarter compared to the industry median, but many metrics of fintech banks appeared to be outliers, showing a fast-moving space that draws enthusiasm and doubts.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Private Equity
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Private equity, venture capital deal value worldwide plunges in June, Q2
Total transaction value dipped 56.1% in June compared to the same month in 2021, contributing to a 29.4% decline for the second quarter, 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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Lack of maturing debt protects US companies from rising rates
Rising interest rates and widening credit spreads are increasing the cost of borrowing for U.S. corporations. Still, low demand for new borrowing and refinancing should protect companies in the immediate future.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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Moviegoers flock back to blockbusters as summer box office booms – S&P podcast
The 2022 box office results are outstripping most expectations. Analysts now believe a return to an $11 billion annual domestic box office is possible — just not this year.
—Read the full article from S&P Global Market Intelligence
The 'cloudification' of telcos presents major opportunities for cloud services
As cloud technology evolves, the network and operational capabilities of wireless operators also continue to grow at a rapid pace as a result of cross-sector partnerships.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Bolivia vies to join lithium producers club after years of disappointment
Thought to hold the world's largest reserves of the critical metal, the South American country has signed deals for pilot projects with six companies including U.S. startup Lilac Solutions.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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Digital mining in Texas booms as global crypto industry losses mount
The Lone Star State continues to lure cryptocurrency miners with inexpensive power and few regulatory hurdles.
—Read the full article from S&P Global Market Intelligence
Upcoming midterm elections pose new challenge to Biden climate agenda
Potential Republican majorities in Congress after the November elections could further slow U.S. President Joe Biden's push to implement sweeping climate policies.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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Zendesk to be acquired for $9.9B in wave of private equity software deals
AIB-Ulster Bank €5.4B loan book deal tops H1 European financials M&A activity
Oil, gas deal value hits $50.96B YTD
Tenaris' $460M deal tops metals, mining M&A in week ended July 8
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Written and compiled by Louis Bacani