Despite receding concerns over access to funding and a perceived lower risk of financial distress, business investment – both through capital expenditure and M&A – remains muted in the UK.
S&P Global Market Intelligence's 2024 first-quarter M&A and equity offerings report notes that global M&A deal volume is at the lowest level in almost four years and, although the total value of first-quarter deals was up 18.5% on the same period last year, transaction value is far below the levels recorded in the second half of 2020 and throughout 2021.
Financing conditions have materially improved over the past 18 to 24 months and corporate fundamentals are largely in good shape, says Andrew Menzies, global head of debt capital markets at Societe Generale. So one could argue there is no reason to hurry to raise capital, especially when the market’s resilience to geopolitical turbulence is factored in.
“While credit yields are attractive to investors and inflows into the asset class have been healthy, credit spread valuations are expensive, and this makes them vulnerable to any unexpected shock,” he adds.
