Today is Tuesday, June 07, 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 the cybersecurity sector. Deal volume jumped 26.3% year over year in the first quarter, and the full-year total is likely to edge above 2021, a record year for sector deals. Several factors have driven the pace of M&A, including increasing cybersecurity demand due to new enterprise dynamics catalyzed by the COVID-19 pandemic. Analysts expect the M&A momentum to continue as the fundamentals supporting the sector's market-beating transaction valuations remain firmly in place.
U.S. bank lending has maintained its upward trend despite tightening financial conditions as the Federal Reserve moves to cool off the economy and rein in inflation. Commercial and industrial loans continued to lead lending growth, with a median sequential increase of 5.1% in the first quarter across the big banks. While lending has continued to expand and banks have refreshed projections for growth this year, a shift in the trajectory of underwriting standards is raising doubts about the outlook.
The skilled employee shortage impacting the global mining sector has intensified amid declining labor force participation rates in advanced economies and substantial changes in workers' preferences due to the COVID-19 pandemic. In the U.S., mining and logging sector employment, excluding oil and gas, declined 8.1% year over year in April, according to government data. A tighter labor market may result in higher labor costs as companies must pay more to competitively attract and retain employees.
- In Focus: Cybersecurity M&A
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Cybersecurity M&A shows little sign of fatigue
Cybersecurity volumes and valuations held strong through the first quarter, and analysts believe the same fundamentals and trends that have supported record investment in recent years remain in place.
—Read the full article from S&P Global Market Intelligence
Heavy cybersecurity M&A spending may be here to stay
Even as equity markets have corrected and other sectors have seen M&A cool, cybersecurity acquirers have been as active as ever and are likely to remain that way.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Loan growth stays on track during early Fed tightening
Momentum has held up as the central bank has taken its first steps to tame inflation, but a shift in the trajectory of underwriting standards is raising doubts about the outlook.
—Read the full article from S&P Global Market Intelligence
Early-stage delinquencies up YOY while other credit metrics improve at US banks
Interest rates have continued to rise in the second quarter, but banks appear to have held off on securities deployment as loans have continued to grow and deposits have leveled off.
—Read the full article from S&P Global Market Intelligence
US banks' efficiency ratios improve in Q1 as noninterest income jumps
The aggregate efficiency ratio for U.S. banks was 61.9% in the first quarter, down from 63.1% in the linked quarter but up from 60.0% in the year-ago period, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
Bonuses at US, European investment banks set to drop in 2022 on weaker revenues
After a bumper 2021, bonuses at major European and U.S. investment banks are projected to fall in 2022 as the sector adjusts costs in a challenging market environment.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Retail
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Challenging time for large investors in retail sector
Investors in the retail space have sustained losses as the sector grapples with rising costs and supply-related challenges.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: ESG
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Women make up a fraction of top positions in LatAm banks
Women account for a small percentage of executives and board members at Latin American financial institutions, where gender reporting is not yet a widespread practice.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Private Equity
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Global venture capital investments fall in April
The total number of transactions made public in April decreased 15.9% from the 1,820 transactions announced during the same month in 2021.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Miners' labor supply problem goes from 'challenging' to 'diabolical'
Mining companies are hoping to meet growing demand for materials critical to the world's efforts to combat climate change, but a tight labor market poses an obstacle to cashing in on higher commodity prices.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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Battery blazes, breakdowns underscore 'growing pains' for energy storage
Ranging from limited operational hiccups to catastrophic explosions, a significant number of lithium-ion battery storage failures are accompanying the technology's rise in the power sector.
—Read the full article from S&P Global Market Intelligence
More US gas utilities launch renewable natural gas initiatives in 2022
Gas utility operators across the U.S. have outlined plans to incorporate renewable natural gas into their distribution systems, expanding the sector's push into the alternative fuel market.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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Broadcom's $61B VMware buy ranks as 3rd-largest tech deal
TotalEnergies, Clearway Energy stock prices rise after billion-dollar stake sale
Fintech M&A deal tracker: Building for the long term amid market turbulence
Private buyers continue to pay up for gas utilities in Enstar deal
Ohio-based Liberty Bancshares, Middlefield Banc to merge
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Written and compiled by Louis Bacani