As more treasurers see the benefits of team membership In NeuGroups, we launch a capital markets group to fill a gap in our network.
The NeuGroup for Capital Markets targets senior managers, directors and ATs leading corporate capital markets activity. It is being supported in its first year by Wells Fargo and Deutsche Bank.
Capital markets, like so much else, are amid a transformation that is starting to accelerate.
- Rate dynamics. Lower-for-longer and negative interest rates in developed markets have created new investor demand for yield. Better analytics backed by AI, meanwhile, are allowing for new forms of structured finance and finance backed by myriad assets and predictable cash flows. This technology-driven benefit is opening up new avenues to funding with more acceptable risk to more issuers.
- Supporting stakeholders. What’s more, strong investment-grade credits with capital markets expertise are in a position like never before to help all stakeholders access better financing.
- AI analytics. The same AI-backed analytics will also help lower the risk-adjusted cost of funding, pre- and post hedging, adjusting for all risk factors, including some new ones.
- ESG consequences. The environmental, social and governance consequences for capital raising are also on the rise. Access to and cost of capital may be increasingly driven by ESG scores and related use of proceeds as investors, banks, employees, governments and prudential regulators seek to promote sustainability alongside social and good governance objectives via finance policy.
Changing the world for the better is also growing more capital intensive as the high-margin software plays have been largely done.
- Platforms. Further, we expect the means to secure bank and non-bank credit; issue and distribute bonds and other fixed-income instruments, plus swap or hedge them, will be moving to platforms with accelerating pace. The traditional broker-dealer model with its fixed pricing to issue, underwrite and distribute is hard to justify given the digitalization potential. Digital platforms will be lowering fees, automating processes and putting execution from financing strategy to distribution in the hands of smart machines.
- Benchmark change. Oh, and while all this is starting to take flight, capital market participants are being asked to abandon the core reference benchmark— Libor, and its equivalents—that underpins most of their transactions for something new.
- Event risk. If that’s not enough to come together with peers to share and learn, plus validate a way forward through this transition to a better way to source capital, we’re sure some events will transpire to make this group invaluable.
The first meeting is planned for May, so inquire here about joining if you believe in the mission and want to be a founder.