NEWSLETTER of February 5, 2021

The following content has been added at finexpert:

Questions of doubt in corporate valuation QoD#24: Re-/Delevering: ßL = ßU (1+D/E) or ßL = ßU (1+(1-t)D/E) ?

Bernhard Schwetzler
Applying industry betas requires some adjustments in case of differences between the leverage of the industry and the leverage of firm to be valued. This adjustment is called the De-/Relevering of the beta factors. There are two popular versions of the corresponding equations for this procedure. This video discusses the requirements for both equations necessary to produce reasonable results. It also makes a judgement on the realism and the consistency of these requirements. (February 5, 2021).  >more (videoarchiv QoD#1-24) 

Candriam
ETHNIC DIVERSITY: WHY INVESTORS CANNOT AFFORD TO REMAIN SILENT
The event which pushed Covid out of the global news headlines for part of 2020 was the death of George Floyd while in the custody of police. Only one of a series of controversial police actions in the US in recent years, this time the event triggered a global campaign against racism. The Black Lives Matters movement has been revived with knock-on effects for the corporate world. These ongoing reactions demonstrate that in the era of responsible capitalism, corporations are increasingly affected by societal debates. >more

EY
MITTELSTANDSBAROMETER: JANUAR 2021
Despite the Corona pandemic, the majority of SMEs in Germany are still in a positive mood: 87 percent currently rate their current business situation as rather or entirely positive. However, the proportion of those who are fully satisfied has fallen from 57 percent last year to 49 percent - the lowest figure since 2015. Looking ahead to the next six months, 45 percent of SMEs expect their business situation to improve. A large majority of 93 percent see their own company in a rather stable or even very stable state. >more

J.P. Morgan
INVESTMENT-AUSBLICK 2021
Support measures by governments and central banks appear to have helped economies through the worst of the Covid 19 crisis, and vaccines offer hope that an end is in sight, which should encourage policymakers to do more in the months ahead. The extraordinary corporate and government debt burden at the end of the pandemic will likely result in longer-term low interest rates and continued bond purchases by central banks. >more

KfW Research
KREDITNACHFRAGE DER UNTERNEHMEN SINKT DEUTLICH – UND BANKEN WERDEN RESTRIKTIVER
Bank financing was not in high demand among companies in the fourth quarter of 2020, despite renewed restrictions on economic life. This is one result of the KfW-ifo credit hurdle survey. The proportion of companies conducting loan negotiations with banks fell significantly in both size classes and to a new all-time low. Due to the high level of uncertainty about the further course of the pandemic, interest in investment financing in particular is likely to be low at present. >more

Private Equity Wire
PRIVATE EQUITY GLOBAL OUTLOOK 2021
2020 saw unprecedented pandemic-induced turbulence on the political, social and economic arenas not seen for decades. While some of the major private equity groups on the global scene – the likes of KKR, Blackstone and Apollo – managed to draw on dry powder, scoop up distressed assets in the wake of the turmoil, and launch new credit funds amid the financial havoc, there are many firms who have struggled with keeping their portfolio companies afloat while coping with vast demands on management. >more

CORPORATE GREEN BONDS
Caroline Flammer
2020
I examine corporate green bonds, whose proceeds finance climate-friendly projects. These bonds have become more prevalent over time, especially in industries where the environment is financially material to firm operations. I document that investors respond positively to the issuance announcement, a response that is stronger for first-time issuers and bonds certified by third parties. The issuers improve their environmental performance post issuance (i.e., higher environmental ratings and lower CO2 emissions), and experience an increase in ownership by long-term and green investors. Overall, the findings are consistent with a signaling argument — by issuing green bonds, companies credibly signal their commitment towards the environment. >more

THE ELECTRONIC EVOLUTION OF CORPORATE BOND DEALERS
Maureen O'Hara, and Xing (Alex) Zhou
2020
Technology transformed the trading of financial assets but has been slower to come to corporate bond trading. Combining proprietary data from MarketAxess with regulatory TRACE data, we investigate how electronic request for quote (RFQ) trading affects bond dealers and trading more generally. We demonstrate that electronic trading remains fairly small and segmented, but has wide-ranging effects on transaction costs and execution quality in both electronic and voice trading, and the inter-dealer market. We identify features particular to bond markets that have and may continue to limit electronic bond trading growth. We provide an intriguing portrait of a market in transition. >more