Execution Strategies and Investor Engagement in a Post-Covid World
Cheap money, busy investors: how can companies optimise bond funding?
Interest rates and inflation are dominating conversation in corporate bond markets — along with ESG. But whereas consciousness of environmental, social and governance issues is only going to rise, rates could go either way. They might be at the gates of a new upward road — or 2021 might just be a hiccup in the lower for longer era.
Companies and investors have to navigate these unpredictable seas.
GlobalCapital held a roundtable discussion in September with prominent corporate bond issuers, investors and an investment bank, to explore how treasurers can make the most of the present market, and what investors would like to see.
The speakers noted the curious correlation between spreads and rates, debated whether issuers should try to give investors well-performing deals, and tackled the pros and cons of crosscurrency funding. On all sides of the market, participants are dissatisfied with the present pattern of spreads being tightened a long way from initial price thoughts, which can waste investors’ time, but issuers did not jump at one investor’s suggestion to just pay a 10bp new issue premium.
Virtual roadshows were hailed as an efficiency breakthrough, but investors still want physical meetings including site visits in selected cases. Two issuers discussed their thinking on future sustainable funding, in a market in which an issuer’s transition story is now central to all investor relations.
Participants in the roundtable were:
Hervé Boiral, head of euro credit, Amundi
Ivan Giacoppo, head of finance, Atlantia
Rick Gokenbach, treasurer, General Motors Financial
Luke Hickmore, investment director, Aberdeen StandardInvestments
Andrew Menzies, global head of corporate debt capital markets, Societe Generale
Jérôme Michiels, chief financial officer, Wendel
Sverre Serck-Hanssen, head of capital markets, Equinor
Jon Hay, corporate finance and sustainability editor, GlobalCapital (moderator)