US corporate debt issuance has begun October at about half the expected pace for October as the government shutdown in Washington and looming debt ceiling deadline is pushing companies to the sidelines, reports the
Corporate borrowers initially shrugged off the gridlock and sold about US$10bn worth of investment-grade bonds in the US during Wednesday, according to Standard & Poor’s (S&P) leveraged commentary and data (LCD). However, according to the business daily the number of expected new offerings has fallen sharply since then, and analysts suggest that previous expectations of US$20bn in new issuance this week were overly optimistic.
Market participants are now debating how long the government shutdown could last, and what implications it may have for the US economy and debt capital markets if it continues for an extended period.
The stand-off on Capitol Hill has also raised concerns about negotiations to increase the country’s US$16.7 trillion debt ceiling later this month.
The US Treasury has stated that its borrowing authority will be exhausted by 17 October, leaving it with about US$30bn to pay its bills. Failure to raise the debt ceiling by then may impact the Treasury’s ability to keep paying interest on outstanding debt.
The decline in new debt offerings follows a rush of corporate bond sales in the US late last month. A drop in US Treasury yields since the Federal Reserve unexpectedly announced on 18 September that it would not taper its bond buying programme provided an opportunity for companies to accelerate their planned debt issuance. September’s total reached US$140bn, surpassing the previous record US$136.6bn in sales set in November 2012, according to Dealogic.
The US money market fund reforms came into effect in 2016 and are already dramatically shaping US fund industry with investors flooding out of prime funds and into government securities. While the reforms are similar, they are not the same. GTNews interviews Yeng Bulter, global head of the cash business at State Street Global Advisors on the differences.
The top five sectors Asian fintech investors are interested in are data analytics, blockchain, lending, payments and regtech, according to Gary Hwa, EY regional managing partner.
On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.
Kicking off day two of the Singapore Fintech Festival, Deloitte Chairman David Cruikshank said that fintech is significant for three reasons. First, customer expectations of services are higher than ever. Second, barriers to entry are lower than before. And finally, financial institutions (FIs) face a threat of what a competitor might do.