The Corporate Financing Forum 2013

Euromoney’s Corporate Financing Forum 2013 took place against a background of a bumper year for corporate bond issuance. Nearly 200 delegates from across Europe gathered in Munich to hear from the experiences of issuers, investors and intermediaries in the corporate financing arena.  

Professor Peter Bofinger, a member of Germany’s Council of Economic Experts, opened the conference by developing Larry’s Summer’s recent argument on ‘secular stagnation’. He argued that the exhaustion of the debt capacity of both the private and public sectors might combine with limits on central bank action to produce an era of low growth and inflation on European economies.

The opening debate centred on the highly favourable environment for corporates to access funding. Florian Stapf, from Standard & Poor’s, observed a noticeable shift for corporate bond issuance in the non-investment grade area, with attractive rates for first time issuers, as investors take more risks in their search for yield. 

Nicholas Bamber, head of Western Europe debt capital markets at RBS, commented that the bank market, in response to the booming bond market, has become a ‘super competitive’ space, with lenders having to compete heavily to put limited capital to work. For the issuers on the panel, the opportunities in the markets looked positive, despite signs of imminent withdraw of easy money, or what Hakan Wohlin from Deutsche Bank described as, ‘living in artificial glut of plenty’. Heike Rust, head of group finance of Axel Springer, said that ‘corporates have learnt to live with crises’ and that the 2008 crisis had prepared them for living with market volatility.

Issuers on the high yield panel were overwhelmingly pleased with the low yields on offer, as borrowing costs for junk rated companies had fallen substantially in 2013. Henner Boettcher, group treasurer of HeidelbergCement, which issued two bonds this year with the lowest coupon ever for the company, emphasised the ease of tapping the high yield market, which required just one day of preparation time and less stringent documentation, in comparison to the lengthier bank financing process. However, David Newman, head of global high yield at bond buyer Rogge Global Partners, warned that tight spreads risked eroding investor appeal as the asset class appeared to look evermore like investment grade.

The increased regulatory burden on companies – intended or unintended – proved a particular concern. Richard Raeburn, chairman of the European Association of Corporate Treasurers, questioned why the real economy must be subjected to the costs of regulatory burden, when bank behaviour was the cause of systemic risk. Nathalie Piscione, senior officer in the post trading team at regulator ESMA, defended the demanding requirements of EMIR initiative, saying it was being put in place to protect corporates from the lack of trust that had developed in the market.

Markus Ferber, the MEP who is the point man for financial regulation at the European Parliament, expressed some scepticism that the desire to clamp down on egregious trading activity – as expressed in the proposed Financial Transaction Tax – could fully be squared with the need to protect legitimate financial market requirements of companies operating in the real economy.

Euromoney thanks all our sponsors, speakers and attendees for making the 2013 conference such a success.
For sponsorship enquiries contact Andrew Lennon on +44 207 779 8043 or email alennon@euromoneyplc.com