August Was Slow?

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Although no one has ever found a Chinese version of the supposedly-Chinese imprecation “may you live in interesting times,” we heard it quite a bit over the long weekend. We do indeed live in interesting times when the president and the chairman of the Federal Reserve need to give booster-ish speeches going into a long weekend to quell what many feared was quickly mounting into a panic in both the credit and equities markets.
Despite a credit crunch and equity market volatility keeping August more interesting than many expected, it was a very slow time for much of the finance industry. The mergers and acquisitions pace slowed to a crawl. It was the slowest month for mergers since 2004, according to research firm Dealogic. Europe's corporate-bond issuance having plunged more than 75% last month. (High-rated corporate bond issuances in the US, however, were up, as investors fled from riskier debt.) The high yield debt market basically closed up shop for the month, hitting what the Wall Street Journal calls a “near all time low.”
The wise and wealthy we spoke to over the weekend (some of whom seem a bit less wise and probably less wealthy after market turbulence in mid-August) expect only more of the same.
“It’s going to be a wild ride through September,” a portfolio manager at a major institutional investor told us over the weekend. “Look at what happens in high yield. If they can’t get the high yield market cranking again, there’s going to be a lot of pain everywhere.”
Being told that August was slow seems a bit like waking up with a raging hangover and being told the party was dull. Well, yes. It might have been slow. But it was a very wild slow.
Slowest August since ‘04 [Reuters Dealzone]
Oasis for Bonds: Investment-Grade Issuance Soars [Wall Street Journal]

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