Are Marketed Follow-on Discounts Signaling Increased ECM Appetite?
With a total of $12.0B in capital raised, the month of June saw an uptick in ECM market activity surpassing both April ($7.6B) and May’s ($6.3B) totals. Marketed follow-ons represented 30.2% of total ECM issuance in H1 ($17.0B), and 75.0% of total ECM issuance in the month of June ($9.0B).
Of note, marketed follow-on discounts have steadily declined from January of this year. Discounts in January were -23.7% and have come down to -5.9% in May and -8.2% in June.
Going back to 2006, marketed follow-ons have had an average discount of -11.0%. Interesting that in January and February those discounts were much steeper than the historical average while today’s discounts are well under that historical average. This could signal a renewed appetite for ECM offerings at today’s stock prices. Brazilian Electric Power Co. priced the largest marketed follow-on of the month, a $5.9B deal on June 9, with a -7.0% file to offer discount.
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