Archive for September, 2010

Global stock underwriting down 9 percent so far this year

Sunday, September 26th, 2010 | Finance News

NEW YORK (Reuters) – Global stock underwriting proceeds have slipped nine percent so far this year as investors prove less willing to take risks amid an uncertain economic recovery.

Proceeds from global equity capital markets underwriting activity have fallen to $496.14 billion from $544.96 billion so far this year.

But the number of deals has increased 5.6 percent to 2,817 deals compared with a year earlier as banks have been willing to underwrite smaller offerings.

Globally, JPMorgan Chase & Co (JPM.N) nabbed the top spot among banks for equity capital markets (ECM) underwriting in the first three quarters of 2010, but it hauled in less than half of what it did a year earlier.

The bank kept its No.1 ranking, with Morgan Stanley (MS.N) in the No. 2 spot, while Goldman Sachs (GS.N) was third.

JPMorgan brought in proceeds of just $39.5 billion compared with $80.07 billion a year earlier.

The bank underwrote 224 offerings according to Thomson Reuters data at the close of U.S. markets on Friday, compared with 290 in the period a year earlier.

Equity capital markets data includes underwriting of initial public offerings, follow-on offerings and other equity-related securities.

A slow economic recovery may have affected companies' quarterly results and valuations, meaning that IPOs in the pipeline may not be able to fetch top dollar, said Frank Maturo, co-head of equity capital markets for the Americas at Bank of America Merrill Lynch.

That, along with an attractive debt market, may have caused some companies to wait, Maturo said.

In contrast to lagging global ECM activity, global mergers and acquisitions activity has risen as improved financing options and substantial war chests have allowed corporate and private equity buyers to pursue deals.

Worldwide M&A has totaled $1.678 trillion so far this year, up 21 percent from a year earlier, according to preliminary data from Thomson Reuters.

Still, the third quarter saw a handful of landmark ECM deals. China's AgBank (1288.HK) (60288.SS) IPO in July raised $22.1 billion.

Last Thursday, Brazilian state oil company Petrobras (PETR4.SA) sold $70 billion in shares at a higher-than-expected price, making it the world's biggest ever public offering.

Bank of America Merrill Lynch (BAC.N) ranks fourth in the ECM league table, while Switzerland's UBS (UBSN.VX) is fifth.

"Data points for how robust the IPO markets are post-Labor Day are still to be determined," Maturo said, referring to the U.S. public holiday in September.

POSITIVE SIGNS

The outlook for equity capital markets globally could be improving. Top U.S. automaker General Motors, for instance, could raise as much as $20 billion in November through an IPO.

A strong stock market could buoy investors' optimism.

As of Friday's close the S&P 500 was up 9.47 percent so far in September, its strongest monthly gain since March 2000 when it was up 9.67 percent.

The end of summer holidays and a lessening worry that the European sovereign debt crisis will spread could also help.

"It will continue to be selective, deal by deal, and deals will be priced for their own, specific fundamentals, but on balance I think we're in a much more constructive phase of the market than we have been in some time," said Mark Hantho, global co-head of equity capital markets at Deutsche Bank.

U.S. insurer American International Group Inc (AIG.N) plans to list its the Asian life insurance business AIA Group in October in an IPO that could raise about $15 billion.

The IPO comes after AIG, nearly 80-percent owned by the U.S. government, failed to sell AIA earlier this year to Britain's Prudential Plc (PRU.L) for $35.5 billion.

There are also a handful of large private equity-backed IPOs in the U.S. pipeline. Hospital operator HCA Inc has filed to raise up to $4.6 billion and Toys R Us Inc (TOY.UL) has filed to raise up to $800 million.

Nielsen Holdings BV, best known for viewership ratings that often determine the fate of TV shows, hopes to raise $2.01 billion.

"Clearly if the deals price well and trade well there will be follow through to that," Bank of America's Maturo said, when asked about a broader pickup in IPOs. He added that with the cheap cost of debt, the private equity-backed deals are not being forced into IPOs.

"The market has picked up substantially in September, but valuations are not quite as attractive as some might like to see," he added. "It's possible we'll see a number of deals pushed to late 2010 or 2011."

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Yuan rise could worsen China’s imbalance: central banker

Sunday, September 26th, 2010 | Finance News

BEIJING (Reuters) – A rise in the value of the yuan may intensify expectations for further increases and could lead to a worsening of China's international payments imbalance, a regional central bank official said in comments published on Monday.

The comments by Xu Nuojin, deputy head of the People's Bank of China (PBOC) Guangzhou, were published in the Financial News, a paper run by the central bank, and come amid growing pressure from Washington for faster yuan appreciation.

"Any efforts to address the international payments balance by adjusting the yuan exchange rate will achieve no results," Xu wrote in an opinion piece.

He did not elaborate on the currency issue, but he added that China has to boost consumption and investment to address the problem of high savings levels in the Chinese economy.

Many Chinese economists and officials, like Xu, have reiterated their view that the yuan, also known as the renminbi, is not undervalued and should not be blamed for China's trade and economic imbalances.

(Reporting by Zhou Xin and Kevin Yao; Editing by Ken Wills)

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JPMorgan in talks for RBS Sempra trading book: report

Sunday, September 26th, 2010 | Finance News

LONDON (Reuters) JPMorgan Chase (JPM.N) is the frontrunner to buy the remaining infrastructure of RBS Sempra Commodities (SRE.N), the Financial Times said on Monday, citing people familiar with the deal.

French bank Societe Generale (SOGN.PA) is among those said to be considering acquiring the group's North American gas and power trading book, the paper said.

The U.S. bank earlier this year bought RBS Sempra's global oil, metals, coal and European power and gas business for $1.6 billion.

(Reporting by Karolina Tagaris; Editing by Lincoln Feast)

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