Tags: stock | bond | issues | frenzy

Frenzy of Stock Issues Signals Good Times

Friday, 15 May 2009 05:10 PM

By Dan Weil

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In the dark days of last fall and winter, even the bluest of blue chip companies had trouble raising capital.

Now companies are issuing stocks and bonds at the most heated rate in years, and investors are snapping up them up like catnip.

That of course bodes well for capital markets and the economy.

Secondary share offerings already hit a record in May, before the month is even half over, The Wall Street Journal reports.

These sales, by companies which already are publicly held, total $54.9 billion so far this year, the busiest period since 2000, according to research firm Dealogic.

"It's an indication that the healing process has begun," Jack Ablin, chief investment officer at Harris Private Bank, tells The Journal.

And it’s not just stocks. Investment-grade bond issuance is on pace for the best year since Dealogic started compiling the numbers in 1995. And companies have issued more than $13 billion of junks bonds since April.

Banks have been going nuts with stock sales since the stress tests earlier this month, announcing more than $36 billion in stock offerings to fill their capital coffers.

All that activity creates the seed for economic recovery, experts agree.

"We have willing sellers and willing buyers (of stock and debt). That's what we need," Linda Killian, founder of Renaissance Capital, tells USA Today.

"It's not just confidence being built. It's real capital being raised," Rod Smyth of Riverfront Investment tells the paper.

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