Just six months ago, the macroeconomic landscape was quite different than it is today. The U.S. and eurozone economies were expected to continue growing as inflation was thought to be a short-term hurdle. Now, the Fed raised rates by 25 basis points in March, 50 basis points in May, and 75 basis points in June, bringing the federal funds rate range to 1.50%-1.75%, with even more change expected by the end of 2022. Given these evolving dynamics, we asked a panel what they’ll be looking out for regarding capital markets activity and subsequent issuance in the second half of 2022. The discussion was led by Gina Kashinsky, Managing Director, Equities Head of Global Markets Group at S&P Global Market Intelligence.

Paul Gruenwald – Global Chief Economist (S&P Global Ratings): There's so much macroeconomic uncertainty and balls in the air right now. I would say the biggest things we’re watching for are a clear sign that inflation is starting to peak and central banks are getting ahead of the curve. There's relatively more certainty about the path of the economy, prices, earnings, and more. I think that should lay a foundation for any rebound in issuance across asset classes – not just equities, but debt as well.

Joe Mantone – News Desk Manager, U.S. Financial Institutions (S&P Global Market Intelligence): The overall volatility has been way higher this year than we have seen in recent years. If that comes down somewhat, then maybe we could see some issuance activity pick up. We’re also curious about the debate over how much of a downturn we are going to see on the macroeconomic front.

I think some individuals are expecting a recession where others see a slowing down of the economy rather than an actual recession. Figuring out where we fall between those two should help us determine the path forward. Also, we'll see if volatility is reduced, which could open up some of the markets for issuance.

Mark Moss – Head of EMEA Desktop Business Development, Financial Institutions (S&P Global Market Intelligence): Something else that we should touch on is the ESG agenda and the growth we've seen in sustainability-related capital markets deals, such as green bonds. We've seen a fairly steady growth rate for that in the last couple of years. You normally expect that to continue, but it also faces its own challenges in terms of greenwashing risks and concerns.

In speaking to customers, it does seem that capital-raising events that are designated for climate change – such as sustainability projects – have to go through additional compliance to ensure there is no risk of greenwashing, which is something that no banks want to be associated with.

It's really hard for corporates to maintain and grow their overall ESG profile across their business. So as that becomes more of a priority from lenders and investors, I think you can absolutely understand the rationale for engaging in relevant transactions and divestments to improve ESG profiles and benefit from better access to the capital markets.

Chris Sztam – Managing Director, Head of Global Markets Group (S&P Global Market Intelligence): I was listening to Paul's earlier remarks with interest around consumption, and the thing that I'm thinking a lot about is a credit shock. It's related, obviously, to the health of the consumer and the job market, so I suppose it's more of a macro factor, but I would keep a close eye on credit quality. I think that will be a really crucial factor from where I sit as we think about the macroeconomic environment, especially if issuers are able to service debt and balance sheets are in pretty good shape, on both at this point. I think the job market seems to be relatively buoyant, but that's something I'll keep an eye on going forward too.