New York to Remain Strong Equity Option: Bankers

Despite a slowdown in new equity issuance caused partially by international investor risk aversion, ECM bankers and issuers are optimistic that New York-listed 144a deals can become a regular option once the markets reopen. This comes as Colombia’s Grupo Suramericana changed a planned international and domestic offering to local only. The COP3.9trn ($2.09bn) deal launched this week, in a market that has kept going precisely because of its insulation from international sentiment. Nevertheless, perhaps encouraged by Arcos Dorados’ recent $977m follow-on, most are convinced the window will reopen, with New York offering transparency and safety to issuers, particularly pan-regional names. It would make sense for issuers in most countries, though there is debate about whether it is in Brazilians’ best interest. “Increasingly you see more interest in the potential for a New York listing. Issuers, and Brazilians in particular, are interested in being seen as having the high-quality accounting” says a senior banker at a shop on the Arcos Dorados deal. Others disagree, noting that Brazilian issuers might find sufficient liquidity at home, and for a significantly lower cost. “If you are Brazilian, Brazil is the best bet for a combination of international investors and a cheap listing. But for ex-Brazil issuers, New York makes all the sense in the world, especially with the current volatility,” says a New York-based ECM banker. There is a consensus that a 144a makes sense for recognizable pan-regional names, and for those in complicated neighborhoods, such as Argentina’s YPF, which raised a $1.23bn follow-on earlier this year. In the New York pipeline before the markets shut down were Argentines Alto Palermo, Santander Rio and Banco Supervielle. Colombians Grupo Aval was also considering offerings. If a window opens up, bankers note that 3Q numbers are good until the third week of February, after which time prospective issuers would be looking at March or April window.