Companies shelve US$25b in fund-raising deals as war rages

[LONDON] Firms across the globe are ditching fund-raising deals at a quickening pace, as volatility destabilises credit markets following Russia's invasion of Ukraine.

Electric car giant Tesla Inc is the latest big-name firm to scrap financing plans, as it postponed a US$1 billion offering of bonds backed by leases on its vehicles last week. Almost 80 companies, nearly half from the US, have put at least US$25 billion in deals on hold since the start of the war nearly a month ago.

Susannah Streeter, senior investment and markets analyst with Hargreaves Lansdown, said: "There has been a severe jolt to investor confidence since the invasion of Ukraine, as sanctions have been slapped on Russia and commodity prices roared upwards."

The caution has reached all corners of the globe. India's Mumbai International Airport Ltd recently delayed a dollar bond deal; SS&C Technologies Holdings Inc halted a US$1.7 billion buyout loan on Wednesday, and Brazil's Trocafone scrapped an initial public offering.

More than US$18 billion of the delayed deals are for debt financing, including bonds, loans and asset-backed securities; the rest was to have gone into mergers, acquisitions and initial public offerings.

The war has also left dealmakers in Europe unsure about if and when roughly US$300 billion in mergers, acquisitions and listings will go ahead.

There has already been a 74 per cent plunge in global equity listings, and a 28 per cent fall in global corporate bond issuance so far this year, going by Bloomberg data.

It is a promising start to the week for Europe's primary bond market, with the sudden re-emergence of corporate issuers such as chemicals firm Akzo Nobel, beauty products maker L'Oreal and packaged food company Nestle.

Akzo Nobel and Nestle are expected to price their bonds on Monday. L'Oreal started investor calls for its planned issue Volkswagen, Skandinaviska Enskilda Banken and Vonovia are also among Monday's six issuers so far, with daily volume set to reach at least 6 billion euros (S$9 billion).

Four additional new mandates were added to the pipeline so far this morning. Asia Asian issuers are returning to the dollar bond market after the Federal Reserve's interest rate hike last week removed uncertainties, with the Philippines and South Korea's Hyundai Heavy Industries seeking sustainable debt.

KEB Hana Bank is also planning a dollar-denominated sustainability bond with investor calls commencing Monday. Asia sustainable bond sales, including sustainability-linked debt and those with proceeds earmarked for green and social purposes, reached US$14 billion year to date. The quarter's issuance is only about US$3 billion short of same three-month period in 2021. Americas Bonds syndicate desks' estimates for this week centre around US$30 billion of supply following almost US$29 billion of sales last week.

March volume currently stands at US$158.1 billion, already exceeding consensus forecast for about US$135 billion. Banks have wrapped up a struggling leveraged loan and bond sale for SPX Flow Inc after shifting a portion of the debt into the loan and decreasing some of the discount on the bond. The junk-bond portion priced Friday afternoon at a size of US$500 million, down from US$570 million originally.

BLOOMBERG