IPO bonds: Hundreds of companies pull $45 billion from deals since Ukraine war

At least a hundred companies worldwide have delayed or withdrawn financing deals worth more than $45 billion since the Russian invasion of Ukraine.

These include initial public offerings, bonds or loans and acquisitions. US stock market deals were the hardest hit by global volatility in the first quarter as a handful of companies postponed listings, while Japanese and European bond markets also suffered delays.

The turmoil comes as the conflict has disrupted financing markets, hurting investors’ appetite for risk and increasing uncertainty about growth, raising interest rates, and supply chains. The pulled deals mean the fee feast that bankers suffered last year may be on the cusp of turning into a famine.

“Volatile markets meant deals were difficult to execute,” said Marco Baldini, head of the EMEA bond syndicate at Barclays Plc. He said sales of high-quality bonds had plummeted with the outbreak of war in Ukraine, but in a promising sign, “volumes rose significantly as we approached Easter.”

timing problem

About 50 companies have halted their initial public offering plans since late February, of which 30 are listed in the United States, including companies such as Bioxytran Inc. and Crown Equity Holdings Inc. and Sagimet Biosciences Inc. It is difficult to estimate the total value of the deferred IPOs, as most transaction volumes are not disclosed.

The most notable cases of delays in the amounts disclosed came from Asia and Europe. Olam International Ltd. has postponed. An initial listing of its food unit on the London Stock Exchange would have valued the company at £13 billion ($17.1 billion), while Dalian Wanda Group Co. The shopping mall unit that was targeting to raise about $3 billion.

“Many plans for new offerings are likely to be deferred until more quiet returns are achieved,” said Susanna Streeter, senior investment and markets analyst at Hargreaves Lansdown Plc. “Timing is everything for the IPO.”

Hit mergers and acquisitions

Mergers and acquisitions have not been left unscathed, with about 10 deals valued at more than $5 billion on hold since the war. That sent global mergers and acquisitions down 15% in the first three months of the year to $1.02 trillion, the lowest rate since the third quarter of 2020, according to data compiled by Bloomberg.

The acquisition of Microsoft Corp. On video game publisher Activision Blizzard Inc. Worth $69 billion, one of a handful of mega deals where companies have mostly stayed away from big deals.

The worst decline was in Europe, where acquisitions targeting companies in the region fell 38%. UK-based Spectris Plc ended negotiations in March to buy Oxford Instruments Plc in a deal that would have been valued at around £1.8 billion. Peel Hunt Ltd. said delayed deals would reduce its investment banking revenue, while Numis Corp. warned of damage.

The impact of the war has been felt in global bond markets, where issuance is down 14% so far this year, according to Bloomberg data. Eight issuers from Europe, including the Slovak Republic, EnBW Energie Baden-Wuerttemberg AG, and French financial firm Coface SA have suspended more than $5 billion in bonds.

In Japan, seven companies, including Sumitomo Mitsui Construction Co., Ltd., Tohoku Electric Power Co., Ltd., and Oryx Corp., have withdrawn local bond issues totaling about $800 million. And in India, even Indian Railway Finance Corp. Ltd. State-owned could not avoid delaying its sale.

Other debt markets, including leveraged loans and asset-backed securities, are also struggling.

Callaway Golf Co. was marketing a $950 million loan before it postponed it indefinitely in early March, citing market conditions. German eye care company Veonet Group halted a €795 million loan that was in the form of a syndicated loan on the day the war broke out on February 24.

Even electric car giant Tesla was forced to delay the sale of more than $1 billion in asset-backed securities in mid-March, while the likes of Deutsche Bank AG were forced to suspend mortgage-backed business deals.

“The war in Ukraine is exacerbating existing supply chain constraints and increasing input costs for corporate borrowers, just as central banks prepare to tighten financial conditions in response to the worst inflation data in decades,” Scope Ratings says in a recent report.

– With the help of Ben Cent.

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