NEWSLETTER of October 20, 2023

The following content has been added at finexpert:

Neuberger Berman
ASSET ALLOCATION COMMITTEE OUTLOOK 4Q 2023
The story of 2023 has been the story of a U.S. recession deferred while the tourniquet of tightening monetary policy has begun to bite elsewhere — Europe in particular. U.S. consumers and corporations entered the year with robust balance sheets that made them surprisingly resilient to higher rates, while a shift from consumer-oriented support to industrial stimulus is preserving the fiscal impetus. Europe’s growth is weakening and the U.S. consumer may be tiring, but ultimately, the more time the economy has to adjust to the slowdown, the milder it is likely to be. >more

EIF | Invest Europe
VC SURVEY 2023
The study looks at the current situation, developments in the recent past, and expectations for the future. The respondents of the EIF VC Survey, VC fund managers investing in Europe, revealed very interesting insights, providing a unique picture of the developments and the market sentiment in 2023. >more

Alix Partners
PE ESG SURVEY REPORT
The private equity (PE) industry now routinely considers environmental, social, and governance (ESG) issues when evaluating prospective acquisitions and making deals. The ESG label has become a political issue — particularly in North America — but industry leaders recognize that companies with strong governance, openness to the best talent, and environmentally efficient processes — whatever label you give those matters — are good prospects, and industry leaders have been acting accordingly. >more

Deutsche Bank Research
DEUTSCHLAND-MONITOR BAUFINANZIERUNG Q4/2023
Germany is in recession. Following the 0.5% drop in GDP from Q3 2022 to 02 2023, we expect a 0.3% quarter-on-quarter decline in Q3. We expect high inflation of 2.5% in 2024 and 2.4% in 2025. 5-10-year mortgage rates climbed from around 1.2% in December 2021 to 3.8% in September 2023, and we expect sideways movement through year-end 2024. Housing supply is likely to remain tight for years, if not the entire decade. We expect affordability to run sideways due to stable interest rates. >more

CROWDED OUT FROM THE BEGINNING: IMPACT OF GOVERNMENT DEBT ON CORPORATE FINANCING
Cagri Akkoyun, Nuri Ersahin, and Christopher M. James
2021
Using hand-collected data on corporate bond and stock offerings, we identify the impact of government debt on corporate financing during World War I. The early twentieth century provides a unique opportunity to identify the impact of government debt on private financing because during this period (1) firms announced the amount they wanted to raise before each security offering and (2) the Treasury issued debt in discrete intervals. We identify the impact of Treasury issues by comparing differences in the amount firms offered to the amount they actually raised when the Treasury was borrowing to when the Treasury was not in the market. We find that long term government bond offerings negatively affect both amount of long-term corporate bonds and dividend paying stocks issued. In contrast, we find no effect of government bond offerings on short term debt issue. Our findings suggest that investors view dividend paying stocks as a close substitute for relatively safe long-term bonds. >more

LBO VALUATION USING FLOWS TO EQUITY
Ian A. Cooper, and Kjell G. Nyborg
2023
The flows to equity method is commonly used in leveraged buyouts and other highly levered transactions. These flows are hybrid flows, mixing expected operating cash flows with promised debt payments under a planned debt schedule. Because of this, it is difficult to accurately estimate the appropriate discount rate, a difficulty that is compounded by the typically changing leverage over time under the planned debt schedule. We show how the flows to equity approach works and discuss its benefits and drawbacks as compared with other, ‘more standard’ methods. >more