Highest Number of Billion-Dollar Follow Ons Done This Week
May 15 2009 - 3:44PM
Dow Jones News
This week set a new record for the number of plus-sized stock
offerings by public companies in the U.S.
A total of eight companies sold $1 billion or more apiece
through follow-on offerings in the past five days, the highest
number ever, according to data from Dealogic. The hefty follow-ons,
in which corporations sell additional shares of their stock to the
public, ranged from U.S. Bancorp's (USB) $2.5 billion offering on
Monday to MGM Mirage Inc.'s (MGM) $1 billion offering on
Wednesday.
Including non-billion-dollar deals, the last five days surpassed
last week as the most active week in more than three years for the
number of follow-on issuers. A total of 30 companies raised $15.4
billion, compared to 20 companies that raised $19.3 billion in the
first week of May, and the highest number since 32 companies raised
$10.1 billion during the week of Dec. 5, 2005, by Dealogic's
reckoning.
Though the majority of the offerings came from financial
services firms, some of which are seeking to pay back funds from
the U.S. government's Troubled Asset Relief Program, other
industries were represented, too. Besides MGM Mirage, Ford Motor
Co. (F) raised $1.6 billion and Anadarko Petroleum Corp. (APC)
raised $1.4 billion.
The stocks were sold into a market that wasn't as accommodating
as it has been in recent weeks; every billion-plus deal declined
after the sales. Bankers attributed the cooler reception to a bit
of follow-on indigestion as well as broader market movements; the
Standard & Poor's 500 Stock Index had sold off 4.6% from Monday
through late in the trading day Friday. But they were still upbeat
about what the large volume of stock sales indicates about investor
attitudes.
"If the market can digest more than $30 billion in supply and
only move down 4%, that's a very positive sign for the second half
of 2009 and into 2010. It shows that buyers believe the market has
truly turned," said Joe Castle, head of U.S. equities syndicate at
Barclays Capital, which was a lead bookrunner on two of the
deals.
Castle said as long as the market remains amenable, he expects a
high level of issuance to continue in the follow-on market in the
weeks ahead, albeit probably not as high as the past two weeks.
Many of the largest raises from the financial services sector are
probably behind the market now, but there will still be demand
across all sectors to recapitalize balance sheets.
-By Lynn Cowan, Dow Jones Newswires; 301-270-0323;
lynn.cowan@dowjones.com