Capital Markets

"Just take the money while you can....."

Capital markets refer to the fundraising activities happening in the credit markets or the equity markets.

Debt Capital Markets

Central Banks worldwide responded to the GFC by printing trillions of USD which translated mechanically into additional debts. Furthermore, all private and public entities leveraged themselves on the accommodative monetary policies with even more debt. Banks and corporates innovated with hybrid capital instruments like Cocos while the CLO business for banks resumed. As such the Debt Capital Markets are a core pillar of the global debt build up since 2008, and a major contributor to the Banking sector collecting fees as underwriters in the process.

Equity Capital Markets / IPOs

The monetary exuberance also led asset managers in search of yield to chase IPOs and valuations into uncharted territories. Market participants in IPOs are buying into 'concepts' rather than cash flow returns in what has become all too reminiscent of the tech bubble of 2000.

While Capital Markets are key to the funding of the economies' growth, we observe a one-way trajectory in these fund-raising activities and we question their sustainability both in the Private and Public sectors at a time when interest rates have risen tremendously in 2022.

In this section we explore the unintended consequences of these monetary and credit trajectories on the capital markets activities as well as the current and future market structure.

 

Publications