NEWSLETTER of August 23, 2024
The following content has been added at finexpert:
Studies > Performance
Deloitte
PROPERTY INDEX 2024
The Deloitte Property Index is one of the most comprehensive surveys of residential real estate markets in Europe and provides valuable information for industry experts, investors and the public. The current, thirteenth edition of the Property Index analyzes data from 24 countries and 69 major cities in Europe and enables a direct comparison of residential property prices. >more
Studies > Corporate Finance
Deutsche Bank Research
EUROPEAN SECURITISATION MARKET – READY FOR A COMEBACK?
A well-functioning securitisation market could help to unlock capital to fund Europe’s economy and its green and digital transition. The bundling of loans into a tradable security can act as a funding tool for banks and/or allow them to transfer risk to investors, thereby creating additional lending capacity. The European securitisation market has been stagnating since the financial crisis. Issuance has been fluctuating around EUR 200 bn per year. This is much lower than in the US, where average annual issuance has been about EUR 2 tr in the period 2013-23. Renewed political support, stronger push factors in the form of looming higher capital requirements for banks and the winding-down of central bank refinancing as well as a more benign macroeconomic environment all provide tailwinds for the securitisation market. However, without targeted regulatory measures, a meaningful pick-up in securitisation volumes will probably remain elusive. >more
Studies > M & A
KPMG
GLOBAL ESG DUE DILIGENCE STUDY 2024
ESG due diligence remains a priority for dealmakers. In fact, respondents to the latest Global KPMG due diligence study report a rise in ESG priority in transactions over the last 12 to 18 months, despite challenges. Many global M&A markets have decelerated in the face of higher interest rates. Geopolitical and economic uncertainty has taken its toll, shifting priorities for many businesses. And, in some countries, there is lively public debate about the merits and justifications to include ESG factors in investment decisions. Despite these headwinds, the findings from our latest survey of more than 600 active dealmakers from 35 geographies confirms the results of the first-ever international study on ESG due diligence. In 2022, we set out to explore ESG sentiments among dealmakers across the Europe, Middle East and Africa (EMA) region. A follow-up study in the US in 2023 found similar developments, albeit slight less pronounced than in the EMEA region. >more
Studies > Macro
Kiel Institut für Weltwirtschaft (IfW Kiel)
GREIX Q2 2024 – TRENDWENDE AUF DEM IMMOBILIENMARKT EINGELÄUTET
For the first time in around two years, German real estate prices rose across the board in the second quarter of 2024. All residential segments - i.e. condominiums, single-family homes and apartment buildings - are increasing in value compared to the previous quarter (Q1 2024) and are also outperforming current inflation rates. This is shown by the latest update of the German Real Estate Index (GREIX), a joint project of the expert committees for property values, ECONtribute and IfW Kiel. >more
Research Papers > Corporate Finance
THE CREDIT MARKETS GO DARK
Jared A. Ellias, and Elisabeth de Fontenay
2024
Over the past generation, conflicting trends have reshaped the ownership of corporate equity on the one hand and corporate debt on the other. In equity, the two great trends have been the shift from public markets to private ownership and the consolidation of American companies' stock in the hands of powerful investment funds. In debt, by contrast, the great trends have been a shift from private loans to quasi-public markets, democratization and dispersed ownership. In this Article, we chronicle the recent and dramatic reversal of these trends in the debt markets. Private investment funds executing a "private credit" strategy have become increasingly important corporate lenders, bringing into corporate debt the same forces of de-democratization and consolidation that have been reshaping the equity markets. We offer new data that illustrates the meteoric rise of the now $1.5 trillion private credit industry and explore the allure and implications of private credit. The transition from bank-intermediated finance to private credit will transform not only corporate finance, but also firm behavior and economic activity more generally. First, as the corporate debt markets go dark, we move to a world in which information about many firms and even entire industries will be lost to the investing public. For better or worse, these firms will act with unprecedented discretion-having been shielded from the discipline and scrutiny of regulators, the trading markets, and the general public. Second, corporate debt-like corporate equity-is poised to become the dominion of investment funds, some of which are almost unimaginably large. These funds will influence everything from firm operations and strategy to corporate distress, with uncertain consequences for social welfare. >more
Research Papers > Corporate Finance
FIRMS' PERCEIVED COST OF CAPITAL
Niels Joachim Gormsen, and Kilian Huber
2024
We study hand-collected data on firms’ perceptions of their cost of capital. Firms with higher perceived cost of capital earn higher returns on invested capital and invest less, suggesting that the perceived cost of capital shapes long-run capital allocation. The perceived cost of capital is partially related to the true cost of capital, which is determined by risk premia and interest rates, but there are also large deviations between the perceived and true cost of capital. Only 20% of the variation in the perceived cost of capital is justified by variation in the true cost of capital. The remaining 80% reflects deviations that are consistent with managers making mistakes. These deviations lead to misallocation of capital that lowers long-run aggregate productivity by 5% in a benchmark model. Forcing all firms to apply the same cost of capital would improve the allocation of capital relative to current corporate practice. The deviations in the perceived cost of capital challenge standard models, in particular the production-based asset pricing paradigm, and lead us to reject the “Investment CAPM.” We describe actionable methods that allow firms to improve their perceptions and capital allocation. >more